This Multibagger Tata Stock Posted 10.6% Sales Growth, Buy For Target Price Of Rs 950: ICICI Direct

ICICI Direct is bullish on Tata Consumer Products Limited, a Tata group stock. The brokerage recommended buy the stocks of the company for a target price of Rs 950 apiece. If the stocks of the company are bought at the current market price, it could give 23% returns in 12 months.

Tata Consumer products is a large cap Tata Group FMCG sector stock. The company has 2000+ distribution directly reaching to 1.3 million outlets in India, which will be increased to 1.5 million outlets by March 2023. Tata Consumer Products also increased its rural/ semi-urban distributors 4x to 8000+ after the consolidation of consumer business.

Stock Outlook & Returns

Today, the stocks of the company opened at Rs 773.45 apiece. Currently trading at Rs 765.55 apiece 1.02% down from its previous close of Rs 773.45 apiece. At the time of writing the stock is trading Rs 115.35 above the 52 week low and Rs 123.45 below the 52 week high, respectively.

Its 52-week low of the stock is Rs 650.20 apiece recorded on 07 March 2022, and the 52-week high is Rs 889 apiece recorded on 07 September 2021. The market capitalization of the stock is Rs 72,682.78 crore. ROE of the stock is 6.18. TTM EPS is 10.15. TTM PE ratio is 75.42. The dividend yield is 0.79% and the face value is Rs 1.

In terms of returns, in the past 1 week, the shares have fallen roughly 2%. However, in the past 1 month, the shares have roughly moved up 0.99%. Over the last 1 year, the share value gained 1.1%. The stock over the long term, particularly 3 and 5 years gave multibagger returns. In 3 years the stocks gave a return of 191.32%. In the past 5 years, the shares gave a positive multibagger return of 371.04%.

Q1FY23 Results

Tata Consumer Products posted solid results with 10.6% sales growth on high base.

• Sales were up 10.6% YoY aided by 18.8% growth in foods business.
• EBITDA was at Rs 457.3 crore, up 14.5% YoY, with margins at 13.7% .
• Consequent PAT was at Rs 276.7 crore (up 38.2% YoY).

Buy for a target price of Rs 950 apiece

Tata Consumer Products Limited's share price has moved up 4.7x in the last five years (from | 164 in August 2017 to 773 in August 2022). We continue to remain positive on Tata Consumer Products Limited's strategy of driving premium trend in foods business & foray in large opportunity size categories. We maintain our BUY rating on the stock. We value the stock at Rs 950 on ascribing 55x FY24 earnings multiple.

Key triggers for future price performance

Tea business margins have fully recovered & focus would shift to growing volumes. Similarly, inflation headwinds in salt are expected to subside, which would recoup margins as well as volumes in the business.

Strong innovation & premiumisation strategy in salt, tea, Sampann, Soulful & Tata Q in India market expected to drive margins. Newer categories like pulses, spices, dry fruits & Soulful to drive volume growth.

Starbucks is witnessing strong growth with significant improvement in operating margins. Likely to drive profitability

About - Tata Consumer Products Limited

Tata Consumer Products (TCPL) is one of the major FMCG companies present in tea, coffee & other beverages in India, UK, US, Canada & some other geographies. In India, it also has salt, pulses, spices & other foods products. Its subsidiary NourishCo is present in packaged water & other beverages. The company is in a JV with Starbucks, which has 275 stores in India.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. 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 taking any investment decision.