Tata Consumer Products - Q1FY21 Result Update - ICICI Securities

Tata Consumer Product (TCPL) reported a strong set of numbers with 13.4% revenue growth led by 18.9% growth in acquired food business (Tata Salt & Tata Sampann), 15% growth in international beverages (Tetley & EOC) & 11% growth in India beverages (Tata Tea & Grand). We believe the entire product portfolio has benefited from increased in-home consumption across countries. The highlight of the quarter has been (1) market share gains in India tea business with 8% sales growth whereas category saw 5.4% decline (2) robust 50% sales growth in pulses & spices, (3) market share gains in EOC (US coffee) with 26% sales growth. We believe the strong growth throughout quarter has been a result of consumption shift from unbranded to branded in tea, pulses & spices & better availability of the company's brand at e-com channel (specific EOC in US). Operating margins expanded 312 bps with gross margin expansion of 176 bps & saving in marketing, employee & overhead spends to the tune of 56 bps, 50 bps & 30 bps respectively. Adjusted PAT increased 42.4% to Rs. 282.2 crore.

Valuation & Outlook

With merger of food business, the product portfolio has presence of high growing categories like pulses & spice. We believe the growth prospects largely depend on converting loose or semi branded consumption to branded given tea, pulses, spices have a very large unorganised market. We also see margins expansion possibility in the long run with low raw material price volatility (current times are exception). We remain positive on the stock & maintain BUY rating with a revised target price of Rs. 525/share.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TataConsumerProduct_Q1FY21.pdf

Shares of Tata Consumer Products Limited was last trading in BSE at Rs.518.4 as compared to the previous close of Rs. 484.75. The total number of shares traded during the day was 1330769 in over 20016 trades.

The stock hit an intraday high of Rs. 530.1 and intraday low of 482.75. The net turnover during the day was Rs. 680961379.

Source : Equity Bulls

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