The stock of Tata Consumer Products could be the next Titan in the making, brokerage firm Geojit has said.
"Tata Consumer as a stock that we believe is an emerging full-fledged FMCG company as it wants to expand its product range in the coming few years. Tata group chairman has gone on record saying that Tata Consumer will undertake all initiatives in the FMCG space from the Tata group.
Tata Consumer has set a very ambitious plan to capture a larger pie of spices and pulses, which, at present, dominated by the unorganized players. So what Titan did with gold business Tata Consumer could do with spices and pulses," Geojit has said.
Why is Geojit recommending Titan?
According to the brokerage firm the company is under transformation process with all FMCG business from Tata group would be sheltered under this company.
"Despite challenging business environment company came out excellent financial numbers for the quarter ended June 2020 where consolidated net profit grew by handsome 97 percent.
Almost every business segment of the company grew for June quarter showing all-round performance . The company's consolidated top line grew to Rs 2714 crore-up by 13 percent while EBITDA shows smarter growth of 37 percent to Rs 486 crore and PAT grew handsomely to Rs 389 crore-a growth of 97 percent.
"The company could expand margins for the June quarter due to price hike, better product mix, and lower promotions. During the quarter, the company gained market share in the tea business, which we believe is a significant achievement.As a long-term strategy, the company is removing layers in distribution like doing away with consignee agents and distributors and directly supplying to stockists. This will make the company nimbler and quicker.
The company is cash-rich with a net cash surplus of Rs 2000 crore," Geojit has said in its report.
According to the broking firm, Tata Consumer could be next Titan as the company has the ambition to become full-fledged FMCG player playing across multiple categories.