Buy This Multibagger Tata Group Stock For Target Price Of Rs 907, Reported 10.6% YoY Revenue Growth

Geojit, a renowned brokerage, is bullish on Tata Consumer Products Limited. The brokerage suggests 'buy' the stock for a target price of Rs 907. Tata Consumer Products is one of the leading companies of the Tata Group, with a presence in the food and beverages business in India and internationally. It is the second largest tea company globally and has a significant market presence and leadership in many markets.

According to the brokerage firm, Despite a challenging macroeconomic environment and the impact of inflation in some of its segments, Tata Consumer Products was able to perform decently on the back of price increases. A strong innovation and premiumisation strategy in its core segments, coupled with an increasing number of new product launches in new categories, make the company placed for an upward growth trajectory.

Stock Outlook & Returns

The current market price of the stock is Rs 801.95 apiece. The stock's 52 week low level is Rs 650.20 and the 52 week high level is Rs 889. The brokerage claims potential gains of 14% considering the estimated target price and the current market price of the stock.

Returns over the past 5 years

Over the week, the stock of the company gained 1.91% and in the past 1 month, it gained 1.4%. Over the year, the stock has given a negative return of 6.02%. Whereas, in the past 3 and 5 years, it has given multibagger returns of 198.07% and 312.84%, respectively.

Topline growth driven mainly by price hikes

Tata Consumer Products registered strong revenue growth of 10.6% in Q1FY23 reaching Rs. 3,326.8cr, growth was 12% on a 3-year CAGR basis. India beverages revenue declined 4% on a high base, although margin expanded YoY on account of lower tea costs. Coffee volume grew 43% YoY with revenue growth of 73% of new stock keeping units (SKU's) and roll out in new geographies. India food business revenue grew 19% despite an elevated base, but volumes fell 3% compared with last year. Revenue from the salt business grew 20% and the premium salt portfolio posted 36% growth, yet the business remained under pressure due to persistent inflation in input costs. International business revenue grew 9% YoY to Rs. 837cr with EBITDA growing 9% as well mainly driven by pricing actions.

Key quarterly highlights

• Tata Consumer Products recently entered the alternate meat segment with the launch of Tata simply better- Plant Based Meat (PBM) range.
• In United Kingdom (UK) Tea pigs continued its strong growth trajectory led by a good performance in out-of-home, exports, and grocery channels. Eight O'Clock coffee in the United States (US) saw share gains and grew ahead of the category driven by distribution expansion and targeted promotions.
• Tata Starbucks recorded revenue growth of 238% for 1QFY23, led by normalised store operations with lower restrictions. Opened 7 new stores and entered four new cities taking the total store count to 275.

Promising outlook despite multiple headwinds, buy for a target price of Rs 907

According to the brokerage, "In our view, Tata Consumer Products gives a possibility of a protracted boom runway as it transforms into a larger consumer packaged goods company with aspirations beyond food and beverage (F&B). Significant scope for market share gains in core tea and salt segments, besides, diversification into more food categories, will help the upward trajectory. A strong cash position, improving return ratios, attractive long-term potential for Starbucks and possibility to leverage Tata Group assets (e.g., BigBasket) are other high-quality drivers. Hence, we reiterate our BUY rating on the stock with a revised target price of Rs. 907 using a target multiple of 56x P/E on FY24E adj. EPS."

Disclaimer

The stock has been picked from the brokerage report of Geojit. 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 check with certified experts before making any investment decision.