With a market capitalization of ₹ 63,874 crores, Tata Consumer Products Ltd. (TCPL) is a large-cap Tata group stock with a presence in the food and beverages business in India and internationally. It is one of the largest tea companies globally and has a significant market presence and leadership in many markets. 

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Tata Consumer’s shares have been on a downtrend since the beginning of this year and have lost 9.03% on a year-to-date basis. Its shares had reached a 52 week low of ₹ 686.15 apiece on the Bombay Stock Exchange (BSE) on Wednesday. The shares gained marginally on Thursday and were trading at ₹ 692.45 apiece at 03:13 PM on Thursday. 

Brokerage firm JM Financial has a buy rating on the stock with a target price of ₹ 830 apiece.This translates into an upside of 19.86% as compared to its current share price. 

ICICI Direct has also maintained a buy rating on the stock with a target price of ₹ 950, which indicates an upside of 37.19% as compared to its current share price. 

The brokerage is positive on TCPL’s strategy of driving premium trends in salt & tea and foray in large opportunity size categories. It highlighted that TCPL has forayed into RTE, RTC, water, nutritional foods & multiple other categories with a large opportunity size. Moreover, Starbucks (which is in a joint venture with TCPL) is witnessing robust store addition along with significant improvement in operating margins. 

TCPL has an ideal debt to equity ratio of 0.09, but a low return on equity of 6.31%. Its shares were trading at a price to earnings ratio (P/E) of 55.07 which is significantly higher than the industry P/E of 19.65, indicating that the stock might be overvalued as compared to its peers. It could also mean that investors are willing to pay a higher price for the company’s future earnings. 

Written by Simran Bafna


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