On Tuesday, Phillip Securities launched coverage on Tata Consumer Products (TATACONS:IN) with a Buy rating, signaling confidence in the company's growth trajectory and market positioning.
The firm highlighted Tata Consumer Products' ongoing transformation to broaden its market reach, enhance its product lineup, and position itself as a leading diversified food and beverage (F&B) company in India.
The analysts at Phillip Securities emphasized Tata Consumer Products' strong foundation, with its tea business ranking as the second-largest branded tea player globally and its salt operations holding the largest domestic market share. These core segments are supported by well-established brands. Additionally, the company's organic expansion into pantry staples such as pulses, spices, and dry fruits is expected to drive long-term growth.
Further growth is anticipated from inorganic expansions through acquisitions like Soulfull, Capital Foods, and Organic India. These additions have been scaling effectively and contributing to profit margins. Despite demand challenges in its core segments, Tata Consumer Products' high-margin growth businesses have sustained a robust growth rate, excluding the ready-to-drink (RTD) category.
Phillip Securities pointed out that Tata Consumer Products' shares have fallen 28% from their peak due to general economic slowdown concerns. However, the firm views the current lower stock price as an attractive opportunity to invest in what they consider a structural growth story.
The ₹1,140.00 price target is based on a forward price-to-earnings (PE) ratio of 52 times for the next two years, which is approximately 10% higher than the company's five-year average PE ratio. This valuation reflects Phillip Securities' positive outlook on Tata Consumer Products' prospects and market strategy.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.