Motilal Oswal has given Buy recommendation for Tata Consumer Products recommended buy rating on the stock with a target price of Rs 725 in its researc with a target price of Rs. 725 in its research report issued on May 08, 2021

Motilal Oswal’s research report on Tata Consumer Products

Higher tea prices impacted standalone gross margins by 10.1pp YoY to 30.9%, and higher A&P consequently impacted the consolidated EBITDA margin by 290bps YoY to 9.9%. Consolidated EBITDA de-grew 3% YoY on the back of 13% EBITDA de-growth in standalone. The Tata Sampann portfolio grew 2% during the quarter, impacted by volatility in the Pulses market; portfolio grew 26% during FY21. The scale-up of the Sampann portfolio remains a key monitorable.

Outlook

We lower our earnings estimates for FY22 by 7% on the back of near-term margin pressure in Tea. We maintain our earnings estimates for FY23 and arrive at an FY23 SOTP-based TP of INR725/share. Maintain Buy.