Tata Consumer Products, which sells tea, salt, spices and other consumer products, has delivered stellar results over the past five years, despite rising inflation and a pandemic that has threatened growth. ICICI Securities advised investors in its recently published report to buy the shares of Tata Consumer Products Ltd at a target price of Rs 925/share. Tata Consumer Products Ltd’s transformation journey continued in FY22. It made rapid strides in distribution expansion – 2x direct reach in FY20-22 and introduced multiple innovative products to drive premiumization and market share gains.
Stock price history
On June 23, the company’s shares rose 1.28 percent from the previous close, closing at Rs 718.45/share. It opened for Rs 710 per share. The stock hit its 52-week low at Rs 650.20/share on March 7, 2022 and a 52-week high at Rs 889/share. The stock has delivered a positive return of 174.43 percent in the past 3 years and a massive multi-dredging return of 375.32 percent in 5 years.
Founded in 1962, Tata Consumer Products Ltd. is a Large Cap Company (with a market capitalization of Rs 66019.96 Crore) operating in the FMCG sector.
TCPL’s transformation journey continued into FY22. It made rapid strides in distribution expansion – 2x direct reach in FY20-22 and introduced multiple innovative products to drive premiumization and market share gains. It quickly integrated three acquisitions (Soulfull, Nourishco, Tata Q) and plans to reap the benefits in FY22-24. While ad spend has increased to 6.8 percent in FY22 from 6.3 percent in FY21, it is still below pre-covid levels of 7.7 percent (average: FY17-20). It continues to gain market share – 100 basis points in tea and 400 basis points in salt. In FY22, working capital increased to 71 days (from 39 days in FY21), FCF generation was Rs 4.7 billion (0.6 percent FCF return) and core RoE improved 80 bps to 13.7 percent (on an annual basis).
What do analysts say?
ICICI Securities has purchased Tata Consumer Products with a target price of Rs 925. The current market price of Tata Consumer Products is Rs 714.85. has a buy-call on Tata Consumer Products with a target price of Rs 925. The current market price of Tata Consumer Products.
Jefferies who initiated coverage for the stock earlier this month said the rally may not stop here. The broker set a bull-case target of Rs 1,060 (which translates into 40 percent upside) for the next 12 months and a base case of Rs 960 (translates into 28 percent upside).
“The consolidation of the Tata Group’s consumer business has transformed Tata Consumer into a strong player in the food and beverage space,” said Vivek Maheshwari, an equity analyst at Jefferies. “The Indian business (70 percent of sales) has a diverse mix of leading brands and high-growth segments, while the slow-growing international business has improved profitability. Unique portfolio offers better market visibility, an important differentiator compared to peers.”
According to the analyst, the company’s greatest strength is its salt and tea business. They are the foundation of the Indian business and share similar traits, albeit with some differences. In salt, Tata Consumer leads the market with a share of 38 percent and in packaged tea it is a strong No. 2 with a share of 22 percent.
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