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.

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.

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

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.

Strong FY23 performance with revenue/PAT up 11%/29%, underpinned by innovation, premiumisation and distribution