Tata Consumer Products Ltd. share price target

TCPL’s Q2FY24 was largely in-line with our expectations. We note the positives (1) post completing split-routes for salesmen in 1mn+ cities, it is focussing on ‘rurban’ strategy. It has inducted 1,000 distributors in 50,000+ population towns, (2) Starbucks has added 22 outlets and now focuses on highway stores.

Improved demand in core markets led to robust 16% YoY uptick in India business; rural recovery visible but still below pre-Covid levels

While TCPL’s Q1FY24 was largely in-line with our estimates, we note three positives as (1) the company’s initiative of split routes in towns with 1mn+ population has shown healthy results, (2) the growth businesses reported 58% YoY revenue growth.

We believe Tata Salt has the “price-retention’ power to largely retain consumer prices in the event of commodity price correction – implying higher DCF-accretive gross margin expansion. We reckon it will utilise the higher resources to drive growth in Sampann, Soulfull, Nourishco, Tata Coffee etc.

Despite the volatile macro environment and geopolitical unrest, Tata Consumer Products (TATACONS) delivered a well-rounded performance across key metrics with double-digit revenue growth and an EPS growth of 28% in FY23. The organized Indian food and beverage market is expected to grow at 10-15% over the next 5 years.