Share price of this Tata Group stock and FMCG major moved up by 0.53 percent on BSE to Rs. 1,115.75 in the trading session of Thursday, compared to its previous closing price of Rs. 1,109.85.
With a market cap of Rs. 1.05 lakh crore, at 03:04 p.m., the shares of Tata Consumer Products Limited (TCPL) closed in the red at Rs. 1,105.95, down by 0.35 percent.
ICICI Securities maintained a ‘buy’ recommendation on the stock with a target price of Rs. 1,360 per share, indicating a potential upside of 23% from the closing price of Rs. 1,105.95.
The company’s Q4 FY23-24 result was in line with the estimates of the brokerage, and on a year-on-year basis, the company reported an increase in revenue of 8.5 percent, a rise in EBITDA by 23 percent and a net profit growth of 91.7 percent.
As a result of the improvement in margins of international business, the gross margin increased by 430bps and the EBITDA margin expanded by 189 bps YoY.
TCPL has invested significantly in new products and has introduced one new product every week in FY23-24. The revenue contribution of the new products launched in the last three years has increased from 0.8 percent in FY19-20 to 5.1 percent in FY23-24.
As per the brokerage, with the acquisition of Capital Foods and Organic India, TCPL will likely result in the revenue share of growth businesses increasing to 30 percent of India sales, and the brokerage expects growth businesses to start contributing to earnings in FY25-26 with a reduction in debt, higher scale and synergy benefits.
The brokerage believes that TCPL is likely to prioritise driving productivity, that is, revenue or store, in FY25-26 as it has achieved a strong numerical reach, and the acquisition of Capital Foods and rollout of growth business through the company’s distribution network will help to achieve more throughput per store.
Tata Starbucks added 29 net new stores taking the total to 421 stores at the end of FY24 and the revenue from Starbucks grew by 12 percent in FY24 on a year-on-year basis.
The market share of the company’s salt segment in India expanded by 50bps on MAT-basis, touching its highest-ever market share of nearly 40 percent between Feb-Mar’24. At the same time, India Tea has lost 50bps market share on MAT-basis, and as per brokerage, it remained flat QoQ.
ICICI Securities believes both the salt and tea segments have the potential to gain share in FY25-26 led by portfolio premiumisation, differentiated launches and distribution expansion.
Further, it expects TCPL to report revenue and net profit CAGRs of 16 percent and 18.5 percent, respectively over FY24-26E led by improvement in the profitability of India Foods and revival in the international business.
In terms of financials, the company’s revenue from operations increased by 8.5 percent YoY from Rs. 3,619 crore in Q4 FY22-23 to Rs. 3,927 crore in Q4 FY23-24.
However, the net profit of the company fell nearly 27 percent to Rs. 212 crore in Q4 FY23-24 from Rs. 290 crore in Q4 FY22-23.
As of March 2024, FIIs hold 25.46 percent of the shares, whereas DIIs hold 17.39 percent of the shares in the company, aggregating to 42.85 percent of the institutional holdings.
In the last six months, the company has delivered positive returns of about 25.6 percent and nearly 48.2 percent in the last one year. So far in 2024, it has given positive returns of around 2.4 percent.
Tata Consumer Products, renamed from Tata Global Beverages Limited (TGBL), is home to brands like Tata Tea, Tetley, Tata Salt, Himalayan Water and other emerging brands.
The company is one of the leading companies of the Tata Group, with a presence in the food and beverages business worldwide, and is the second largest player in branded tea in the world.
Written by Shivani Singh
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