Buy this consumer products stock for a 24% return, short-term: ICICI Securities


Target price

The current market price (CMP) of Tata Consumer Products (TCPL) is Rs. 743. ICICI Securities has estimated a target price for the stock at Rs. 925. The stock is expected to offer a 24% upside in 1 year .

Stock market outlook
Current market price (CMP) Rs. 743
Target price Rs.925
1 year back 24.49%
Business Performance

Business Performance

The company’s revenue in FY21 was recorded at Rs. 1,16,020m which is expected to be Rs. 1,27,165m in FY22. Their EBITDA in FY21 stood at 46.2 million which is expected to be 39.1 million in FY22. The company’s adjusted net profit in FY21 was recorded at Rs. which is expected to be at Rs. 10,018 million in FY22. Minority interest was Rs. 957 million (9.3% of pre-minority PAT) in FY21. The company said : “With the acquisition of a minority stake in two major subsidiaries, we believe that the minority stake will be close to zero. However, it must issue 7.5 million shares and 23.8 million shares to acquire Tata Consumer Products UK Group Ltd and Tata Coffee.In addition, the number of TCPL shares will increase to 953 million, from 922 million currently.Overall, there will be u increase in profits by 5-10%.”

Comments from ICICI Securities

Comments from ICICI Securities

Maintaining a buy rating, ICICI Securities commented, “TCPL is in the process of creating a streamlined corporate structure that may allow it to unlock/sell some of its low-growth, low-profit subsidiaries. This is the key insight we took from TCPL’s Restructuring Plan. We also believe that an increase in recurring profits of 5-10% is a high probability after the restructuring, as the minority stake of Rs. 957 million (9.3% of the pre-minority stake) will be almost nil, there there will be a reduction in administration and legal costs, likely savings through freeing up excess management bandwidth and there will be tax savings and better use of tax credits. »

About the company

About the company

The merger of Tata Chemicals’ consumer products business with Tata Global Beverages Limited (TGBL) created Tata Consumer Products Ltd, a major player in the FMCG segment. TCPL owns brands like Tata Tea, Tetley, Tata Salt, Eight O’Clock Coffee, Himalayan Water and emerging brands like Tata Sampann, Tata Soulfull, Tata Gluco Plus and Tata Water Plus. Their brands are present in over 40 countries with a diverse workforce spread across the globe.

(Also read: Motilal Oswal recommends buying this pharmaceutical stock for a 29% rise, in 1 year)

Warning

Warning

The stock above was taken from ICICI Securities’ brokerage report. Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author, and the brokerage are not responsible for any losses caused as a result of decisions based on the article.

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