Tata Consumer Products - Q2 FY21 Result Update - YES Securities

Tata Consumer Products (Q2 FY21) - BUY (Target Rs574, Upside 13.9%)

Tata Consumer Products (TCPL) met our expectations on results despite the headwinds on Starbucks and India tea prices driven by better than expected performance in international tea, strong P&L management in the India foods and beverages business and strong profitability in the associate tea plantations. Market share gains in both tea and salt in India were strong positives which in addition to a strong new launch pipeline especially in Tata Sampann give us more confidence on the future growth trajectory, which will also see benefits of a ramp up in direct distribution. While near-term margin headwinds remain for both the tea and salt business given rising costs, recent price hikes and expected integration benefits from 3Q should partially offset that. The international business seems to be tracking well especially the tea business in both UK and Canada, while EOC still remains a challenge. Tata Coffee business despite seeing strong revenue growth is facing margin headwinds. Starbucks and Nourishco are quickly proceeding towards normalcy and the company continues steady footprint expansion. Overall, we do not find any deviation in narrative and execution from the new leadership and continue to view TCPL as a solid structural story with both growth and margin tailwinds which can deliver industry-leading earnings growth over the next few years. We are building in a 11% revenue and 20% earnings CAGR over FY20-23E. Rolling forward our valuations to FY23, we reiterate our BUY rating with a revised SOTP-based TP of Rs 574, implying 47x/42x FY22E/23E P/E.

YES Securities - Tata Consumer Products (Q2 FY21) - 20201109

Shares of Tata Consumer Products Limited was last trading in BSE at Rs.509.95 as compared to the previous close of Rs. 504.3. The total number of shares traded during the day was 337765 in over 9252 trades.

The stock hit an intraday high of Rs. 517.5 and intraday low of 505.6. The net turnover during the day was Rs. 173112524.

Source : Equity Bulls

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