Tata Consumer Products, which sells tea, salt, spices and other consumer products, has delivered as high as 90 per cent returns in the last two years to its investors despite rising inflation and a pandemic that threatened growth. In it’s FY22 annual report it said that the FMCG company focuses on six strategic initiatives identified by the management to strengthen its foundation as a strong consumer products company.
“Tata Consumer’s holistic strategy aims at transforming by strengthening and accelerating its core business, exploring new opportunities, unlocking synergies, digitization of the supply chain, expansion of its product portfolio and innovation,” highlighted domestic brokerage and research firm Motilal Oswal.
The company is also 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.
“Tata Consumer Products is building Tata Sampann, which is their Pantry category. This should grow in high double-digits by capturing market share from unorganized players via an increase in distribution reach and product launches,” it added.
Tata Consumer Products: Share Price History
Tata Consumer Products, part of Indian conglomerate Tata Group, is a fast-moving consumer goods company (FMCG). The Tata Group stock has declined more than 2 per cent in 2022 (YTD) so far whereas it is down about 3 per cent in a year’s period. However, the company has almost doubled investors money in the last two years and has given nearly 385 per cent returns in the last 5 years. The stock touched the 52-week low at Rs 650.20/share on March 7, 2022, and 52 weeks high at Rs 889/share.
Tata Consumer Products: What Analysts Expect?
The brokerage house expects a revenue/EBITDA/PAT CAGR of 11 per cent/19 per cent/29 per cent over FY22-24 and has arrived at an FY24E SoTP-based target price of Rs 900 per share, implying a potential upside of about 25 per cent from current stock level. It has maintained its Buy rating on Tata Consumer shares.
“The unlocking of sales and distribution synergies from the merger of group companies has started to yield results. This is evident from the market share increase in Tea (+100bp YoY) and Salt (+400bp YoY) as of Mar’22, backed by an increase in numeric distribution. The company is establishing a strong S&D channel, which will act as a key growth driver,” Motilal Oswal said.
In FY22, Tata Consumer expanded into new target markets, launched regional focused packs, unveiled impactful campaigns across multiple platforms, and drove premiumization.
Jefferies initiating coverage on the stock earlier this month said the rally may not stop here. The broker set a bull case target of Rs 1,060 and a base case target of Rs 960 for the next 12 months.
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