Shares of Tata Consumer Products (formerly Tata Global Beverages), a consumer products company under the renowned Tata Group, reached a two-year high of ₹877 apiece in the previous trading session. The company's shares have zoomed nearly 22% over the last two-month period and have rallied 11.46% in the current year so far. The stock is currently just 4.2% away from an all-time high of ₹889.
Amidst this upward trend, domestic brokerage firm Sharekhan believes that the stock still has room to rally further. The brokerage has expressed optimism about the future prospects of Tata Consumer Products.
The brokerage has pointed out that the company's transformation journey to becoming a leading FMCG company is on track. The company is going beyond its core (which has been strengthened) and focusing on building new F&B platforms, which the brokerage believes will create a greater presence across categories.
The company’s growth businesses, including Tata Sampann, NourishCo, and Tata Soulfull, registered 53% YoY growth in FY2023. In Tata Sampann, the company has expanded its core portfolio of pulses, spices, and other staples, ventured into premium categories such as dry fruits, and increased its offerings of Ready-To-Eat (RTE) and Ready-To-Cook (RTC) products, establishing a stronger presence in the pantry space, the brokerage highlighted.
Tata Consumer Products has introduced new-sized SKUs for almonds, cashews, and raisins in its dry fruit portfolio during FY23. The company has also launched assorted gift packs to cater to corporate and festive occasions, making its offerings more relevant.
On the other hand, NourishCo aims to fulfil consumer needs for energy, hydration, and wellness through non-carbonated, ready-to-drink beverages in India. Since its acquisition by Tata Consumer in May 2020, NourishCo has been on a strong growth trajectory, the brokerage stated.
Further, it is scaling up Soulfull’s market presence by leveraging the power of Tata Consumer’s distribution network. It is also building Tata Sampann as a master brand for everyday staples.
Staples provides a significant growth opportunity with the total estimated market in pulses at Rs. 1,55,000 crore and spices at Rs. 60,000 crore, and very small share of organised, branded segment, it said.
In addition, the company is expanding its presence in the Ready-to-Eat (RTE) and Ready-to-Cook (RTC) segments through Tata Sampann Yumside and Tata Raasa. Tata Sampann Yumside currently offers 16 Ready-to-Eat SKUs and 5 Ready-to-Cook SKUs.
In FY2023, the company entered the Ready-To-Cook (RTC) gravies and pastes segment with five everyday and exotic offerings. It also launched two brands, Tata Simply Better in the alternate meat category and Tata GoFit in plant-based supplements, under its protein platform, according to the brokerage.
Sharekhan states that Tata Consumer Products is focused on gaining market share, launching new products, expanding its network, and restructuring costs to improve earnings growth over the next 2–3 years.
The company plans to utilize its strong cash flows for organic and inorganic initiatives, strengthening its key growth pillars in the coming years. With these strategies in place, the brokerage said the company is well-positioned to achieve a double-digit revenue and PAT CAGR of 13% and 17%, respectively, over FY2023 to FY2025.
Thus, the brokerage continues its 'buy' recommendation on stock with a revised price target of Rs. 1,010 apiece. The brokerage firm believes that any significant inorganic deal aimed at enhancing shareholders' value will be a key trigger for improved valuations in the near term.
25 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
