Buy This Stock For 24% Upside, Company Reported Highest Volume Growth In A Brand

Target Price, Current Market Price, and Company Performance

The Current Market Price (CMP) of Tata Consumer Products is Rs. 729. Motilal Oswal has estimated a Target Price for the stock at Rs. 900. The stock has the potential to give a 24% return, in the upcoming 1 year. This is a large-cap company with a market capitalization of around Rs. 67,282 crore.

Tata Consumer Products' revenue from the India Food business grew 19% YoY to Rs. 29.1b, driven by a 17% increase in the Salt business in FY22, along with strong volume growth of 28% in Tata Sampann. EBIT margin contracted by 650bp to 9.4% at Rs. 2.7b. It company has its direct reach commitment of 1.3m outlets in India by the end of March 2022, and has gained ~100bp/400bp market share in core categories such as Tea/Salt. The e-commerce channel has performed well, with its share of revenue increasing to 7.3% in FY22 v/s 5.2%/2.5% in FY21/FY20. The international business registered a 5% revenue decline to Rs. 33.4b in FY22.

The company is offering a Dividend Yield of 0.83%.

Motilal Oswal: advantages and risks

About the stocks of Tata Consumer Products, Motilal Oswal commented, "In FY22, the company has expanded into new target markets, launched regional focused packs, unveiled impactful campaigns across multiple platforms, and drove premiumization. The company strengthening and accelerating its core business, exploring new opportunities, unlocking synergies, digitization of the supply chain, expansion of its product portfolio and innovation, enhancing its focus on premiumization and health and wellness products, embed sustainability, and expanding its sales and distribution infrastructure, supply chain, and capability building towards being a multi-category FMCG player. We expect a revenue/EBITDA/PAT CAGR of 11%/19%/29% over FY22-24. Tata Sampann, which is their Pantry category, should grow in high double-digits by capturing market share from unorganized players via an increase in distribution reach and product launches."

Company profile

The company is a leading FMCG player in the Indian market. Tata Consumer Products brands are Tata Tea, Tetley, Tata Salt, Eight O'Clock Coffee, Himalayan Water, and emerging brands like Tata Sampann, Tata Soulfull, Tata Gluco Plus and Tata Water Plus. Tata Salt recorded an 8%/17% growth in volume/value terms in FY22. Overall, the Premium Salts portfolio grew 27% in FY22, and the company strengthened its leadership in the Salt category by raising its market share by 400bp to 37%. Tata Consumer Products' FY22 annual report focuses on 6 strategic initiatives identified by the management to strengthen its foundation as a strong consumer products company.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.