Tata Consumer Products’ consolidated revenue/EBITDA was in line with our estimates; like-for-like (adjusted for Tata Chemicals’ Consumer biz and IndAS-116) revenue/EBITDA grew 6 per cent/29 per cent for the quarter. The strong performance was attributed to improvement across businesses, barring Tata Coffee standalone. Mr Sunil D’Souza was appointed as MD & CEO with effect from April; hence, the strategy formulation and its execution is expected to be monitored going forward. The brokerage maintains estimates for FY21/FY22 and arrives at an SOTP-based target price of Rs 431.
The share price moved down by -1.58% from its previous close of Rs 362.80. The last traded stock price is Rs 357.05.
The brokerage maintains estimates for FY21/FY22 as the company deals in salt/tea/coffee, for which demand has not been materially impacted due to Covid-19. However, the company faced certain issues pertaining to the supply chain, which is returning to normal day by day (for India). Tata Group has a clear focus on leveraging its brand and participating in India’s consumption story of Rs 30 trillion, which resulted in the merger of Tata Chemicals’ Consumer business with itself.
The merger of Tata Chemicals’ consumer business with TCP is in line with Tata Group’s focus on creating a single FMCG-focused company. The merger offers multiple synergies, including higher outlet coverage, focused new product development, stronger cash flow generation, and scale efficiencies. Moreover, in the short to medium term, we believe the new CEO, Mr Sunil D’Souza would focus more on marketing under-penetrated food products such as pulses, besan (gram flour), spices, and chilla mix, aggressively leveraging the existing strong distribution network and Tata brand.
For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 2132.69 crore, down -22.59 per cent from last quarter sales of Rs 2755.08 crore and down -12.22 per cent from last year’s same quarter sales of Rs 2429.68 crore. The company reported net profit after tax of Rs 230.11 crore in the latest quarter.
Promoters held 63.24 per cent stake in the company as of December 31, 2019, while FIIs held 26.34 per cent, DIIs 3.1 per cent and public and others 7.32 per cent.
Reviewed By This Is Article About Tata Consumer Products share price: Buy Tata Consumer, target price Rs 431: Motilal Oswal was posted on have 4 stars rating.