Motilal Oswal Picks 2 Tata Stocks With "Buy" & "Neutral" Call, Sees Strong Upside Potential

Leading brokerage firm Motilal Oswal picks two Tata Stocks with "Buy" & "Neutral" calls. These two Tata Group stocks are Tata Consumer Products Ltd. and Tata Communications Ltd. Tata Communications is a mid-cap Telecommunication sector stock and Tata Consumer Products is a large-cap FMCG sector stock.

Tata Consumer Products Ltd. (TATACONS)

Motilal Oswal has placed a "Buy" on the stock of TATACONS with a target price of Rs 940/share. If you buy the stock at the current market price, you likely get a return up to 27%.

The stock is currently trading at Rs 743/share on NSE. The stock recorded its 52 week high at Rs 861.15/share and 52 week low at Rs 650.20/share, respectively.

The stock has fallen 0.96% in 1 week, and 4.64% in 1 month, respectively. However, it gained over 7% in the past 1 year. It grew over 93% in 3 years. In 5 years it grew over 144%.

According to the brokerage, TATACONS is on portfolio expansion spree in its F&B segment with product launches into newer and innovative categories such as RTD, Jelly and Glucose through NourishCo. These are expected to be strong drivers of growth for the company.

It added, TATACONS's holistic strategy aims at transforming by: i) strengthening and accelerating its core business, ii) exploring new opportunities, iii) unlocking synergies, iv) digitization of the supply chain, v) expansion of its product portfolio and innovation, vi) enhancing its focus on premiumization and health and wellness products, vii) embed sustainability, and viii) expanding its sales and distribution infrastructure, supply chain, and capability building toward being a multi-category FMCG player.

"We expect a sales/EBITDA/PAT CAGR of 9%/14%/23%, respectively, over FY22- 25. We arrive at our SoTP-based TP of INR940 and reiterate our Buy rating on the stock," the brokerage has said.

 

Tata Communications Ltd.

The brokerage maintains a "Neutral" view on Tata Communications. The stock is currently trading at Rs 1,326.75/share on NSE, down 4.12% from the previous close. 

Today, it opened at Rs 1,369.45/share. The stock recorded its 52 week low at Rs 856.25/share and 52 week high at Rs 1,430.60/share. 

It fell over 55% in the past 1 week and gained over 9% in the past 1 month. In 1 year it grew over 2%. In the past 3 years, it gave over 190% and in the last 5 years, it grew over 109%. 

According to the brokerage, Tata Communications' consol. revenue grew 2.1% QoQ to INR45.3b (in line), led by 3% QoQ growth in data segment v/s healthy 5% QoQ growth in 2QFY23. Voice segment witnessed 4% QoQ decline (v/s 7% QoQ decline in previous quarter); while other revenue grew 4% QoQ. INR depreciated 3% QoQ v/s USD to 82.2 (vs 79.8 in 2QFY23). Nearly 60% of the revenue is contributed by other international currencies.

It added, EBITDA declined 5% QoQ to INR 10.8b (5% miss) led by 6% QoQ decline in data segment EBITDA (contributed 88% to EBITDA). This led to 170bp QoQ consol. EBITDA margin decline to 23.8% (100bp miss), in line with the management guidance of 23-25% margin. Interest cost jumped 26% QoQ to INR1.2b led by a series of interest rate hikes globally, increasing the average cost of borrowing to 5.08% in 3QFY23 from 3.72% in 2Q. This led to a 14% QoQ decline in adjusted PAT to INR4b (in line).

Disclaimer

The stocks have been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.