Despite rising prices and a pandemic that threatened growth, Tata Consumer Products, which distributes tea, salt, spices, and other consumer goods, has given its investors returns of up to 90% over the past two years. According to the FMCG company's FY22 annual report, it focuses on six strategic initiatives chosen by the management to solidify its position as a reliable provider of consumer goods.
Tata Consumer's comprehensive strategy, according to domestic brokerage and research firm Motilal Oswal, "aims to transform by strengthening and accelerating its core business, exploring new opportunities, unlocking synergies, digitizing the supply chain, expanding its product portfolio, and innovation."
To become a multi-category FMCG player, the firm is also strengthening its focus on premiumization and health and wellness products, integrating sustainability, and increasing its sales and distribution infrastructure, supply chain, and capability building.
"Tata Consumer Products is developing Tata Sampann, a product line for its pantry. By taking market share away from unorganized businesses through an expansion of distribution reach and product releases, this should expand in the high double-digits, it was noted.
Tata Consumer Products: Share Price History
Fast-moving consumer products company Tata Consumer Products is a division of Indian conglomerate Tata Group (FMCG). The Tata Group stock has dropped more than 2% this year (YTD), compared to a 3% drop over a year. But during the past two years, the company has almost doubled investors' money, and over the past five years, it has provided returns of about 385%. On March 7, 2022, the stock reached its 52-week low of Rs 650.20/share and its 52-week high of Rs 889/share.
Tata Consumer Products: What Analysts Expect?
The brokerage firm has arrived at an FY24E SoTP-based target price of Rs 900 per share, representing a potential upside of around 25% from the current stock level. The brokerage house predicts a revenue/EBITDA/PAT CAGR of 11%/19%/29% over FY22-24. On the shares of Tata Consumer, it has kept its Buy recommendation.
"Results have begun to come from the group companies' merger's unlocking of sales and distribution synergies. The market share increases in Salt (+400bp YoY) and Tea (+100bp YoY) as of Mar'22, supported by an increase in numeric distribution, demonstrate this. A robust S&D channel that the company is developing will serve as a crucial development engine, according to Motilal Oswal.
Tata Consumer increased its reach into new target areas in FY22, introduced regionally specific packs, featured powerful advertising across numerous media, and promoted premiumization.
When Jefferies began to cover the stock earlier this month, they stated that the surge might not end at this point. For the following 12 months, the broker set a bull case objective of Rs 1,060 and a base case target of Rs 960.