Tata Consumer Shares Surge; Goldman Sachs Upgrades Rating, Sets ₹1,200 Target. Brokerage expects b growth in FY25-FY27; Nomura maintains 'BUY' rating.
TATA Group Stock: Tata Consumer Products (TCP) shares witnessed a remarkable 8.1% surge on April 2nd. The share price reached an intra-day high of ₹1,073.15 on the NSE. By 12 pm, it was trading at ₹1,061.65, up 7.03%, while the NSE Nifty was up 0.41% at 23,260.85. This surge increased Tata Consumer's market capitalization to ₹1,03,585.19 crore.
Goldman Sachs Issues 'BUY' Rating, Sets ₹1,200 Target
According to a Bloomberg report, global brokerage firm Goldman Sachs upgraded its rating on Tata Consumer shares from 'Neutral' to 'BUY'. The brokerage firm raised its target price from ₹1,040 to ₹1,200 per share. Goldman Sachs believes that the company's earnings per share (EPS) are poised for b growth between fiscal years 2025 and 2027.
Reasons Behind the Rating Upgrade?
According to Goldman Sachs, a decrease in acquisition-related expenses will lower net interest costs, and rising tea prices will improve margins. While market competition remains a challenge, the brokerage believes the most difficult period has passed.
Other Brokerage Firms' Opinions
Nomura: Maintained a 'BUY' rating on Tata Consumer with a target price of ₹1,250 per share.
CLSA: Retained a 'Hold' rating but lowered the target price from ₹1,049 to ₹992.
How Were the Company's Q3 Results?
Tata Consumer Products reported a consolidated net profit of ₹279 crore for the third quarter ended December 31, 2024, compared to ₹278.87 crore in the same period last year. The company's total revenue for the quarter was ₹4,443.56 crore, compared to ₹3,803.92 crore in the previous year.
Impact of Tea Price Surge on Profits
The company, known for popular brands like Tata Salt and Tetley tea, reported that increased domestic tea costs impacted profits. Tea contributes approximately 60% to the company's total revenue.
The Indian business, which sells packaged food products including pulses and spices, contributes 56% to the total profit. This segment's profit declined by 43% this quarter, primarily due to the sharp increase in tea prices. This resulted in a year-on-year decline of 210 basis points in the company's consolidated EBITDA margin in Q3.
(Disclaimer: This is not investment advice. Consult your financial advisor before investing.)
