Sharekhan has given Buy recommendation for Tata Consumer Products with a target price of Rs. 875 in its research report issued on Aug 04, 2021
Sharekhan’s research report on Tata Consumer Products
Tata Consumer Products Limited’s (TCPL) Q1FY2022 performance was affected by high base in the international business and higher tea prices, resulting in a ~450 bps OPM decline to 13.3% and decline in adjusted PAT by 29%; revenue grew by 11%. Demand and business environment in India is back to normal; TCPL is focusing on achieving high single-digit volume growth in the branded tea business and strong double-digit growth in the foods business. Gross margin improved by 153 bps q-o-q; tea prices corrected by 20% from their peak; OPM to sequentially improve and will be higher y-o-y in H2FY2022.
With strong growth prospects and sturdy cash flows (FCF/EBIDTA of 100%; net cash of Rs. 2,169 crore), we maintain TCPL as one of the best picks in the FMCG space and retain our Buy rating with unchanged PT of Rs. 875.