In a recent research update dated December 15, Motilal Oswal conducted an analysis of tea prices and production trends, assessing their impact on TATACONS. According to the report, tea constitutes a significant portion of Tata Consumer Products Ltd’s (TATACONS) portfolio, contributing approximately 32% to the company’s total consolidated revenue in FY23. Motilal’s note expresses confidence in the company’s ability to recover lost market share by expanding its distribution network and strengthening its brand presence.

In terms of valuation, Motilal’s analysis indicates that TATACONS is pursuing a dual-pronged growth strategy. Firstly, the company is focusing on new growth engines such as Tata Sampann, NourishCo, Tata Soulfull, and the ready-to-eat/ready-to-consume business (Tata Smartfoodz). Secondly, TATACONS is rapidly expanding its distribution network and enhancing digitization capabilities across the supply chain, with the expectation that these efforts will drive the next phase of growth.

Stock moved 10% up since we discussed it (link) last time on blog.

Finally, the report concludes with a forward-looking perspective, stating, “We anticipate a Compound Annual Growth Rate (CAGR) of 10% in revenue, 15% in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), and 22% in Profit After Tax (PAT) from FY23 to FY26. Based on our Sum of the Parts (SoTP) valuation, we establish a Target Price (TP) of INR1,110. Emphasizing our confidence in the stock, we reiterate our BUY rating.”

For further details, you can find the complete article at: Motilal Oswal Sets Over Rs 1,100 TP, Reiterates Buy Rating on Tata Consumer.