Tata Consumer hits record high; rallies 5% on positive growth outlook

Shares of Tata Consumer Products hit a record high of Rs 863.80 as they rallied 5 per cent on the BSE in Wednesday's intra-day trade on positive growth outlook. The stock of Tata Group's fast moving consumer goods (FMCG) company surpassed its previous high of Rs 861.35, touched on September 14, 2022, amid heavy volumes.

In the past two months, the stock has rallied 21 per cent after the company reported a consolidated 14 per cent year-on-year (YoY) revenue growth in the March quarter (Q4FY23), led by India business. Constant currency sales growth of 12 per cent was driven by 6 per cent volume growth.

Tata Starbucks recorded strong revenue growth of 48 per cent for the quarter, bringing FY23 growth to 71 per cent, albeit on a base that was impacted by the pandemic. This was a landmark year for the business, as it reached 4-digit in topline, the company had said.

Tata Consumer Products is engaged in the trading, production and distribution of Consumer products mainly Tea, Coffee, Water, Salt, Pulses, Spices, Snacks, Readyto-Eat packaged foods products etc. collectively termed as branded business. The Group has branded business mainly in India, Europe, US, Canada and Australia. The non-branded plantation business is in India and tea and coffee extraction businesses are mainly in India, Vietnam and the US.

Tata Consumer Products Limited is one of the top FMCG companies in India with a portfolio of offerings across Foods and Beverages. The Company owns iconic brands with strong heritage like Tata Tea, Tata Salt, Tetley, Eight O’ Clock Coffee as well as new-age brands like Tata Sampann, Teapigs, Good Earth, Tata Copper Plus, Himalayan, Tata Gluco Plus and Tata Soulfull to name a few.

The management said the company will continue to drive sustainable profitable growth with a focus on growing both the core (in India and International) and rapidly scaling the new Growth businesses in India supported by higher brand investments and increasing the breadth and depth of distribution, among other initiatives.

"Premiumization and innovation will play a key role in fuelling growth and the company will continue to keep clear focus on executing cost initiatives including unlocking synergies with legal and organizational restructuring to support the business," the management said in its FY23 annual report.

Analysts at ICICI Securities believe the India business (food & beverage) would continue to dominate with higher growth from newer segments. The brokerage also believes the company has the potential to increase margins by driving premiumisation in mature categories. Also, high growth in Tata Starbucks would be the growth driven in longer run. Analyst remains positive on long term growth prospects.

"The new product portfolio in RTE, RTC, water, nutritional foods & other categories with large opportunity size are to drive volumes. The growth brands (Tata Sampann, NorurishCO, Tata Soulfull and Tata Smartfoodz) contribute 15 per cent of India branded sales growing at 53 per cent (in FY23). The strong innovation & premiumisation strategy in salt and tea is expected to drive margins in established brands. Further, softening of commodity prices along with requisite price hikes to also aid margins," the brokerage firm said.