Tata Consumer Products - Q3 FY21 Result Update - YES Securities

(Rating: BUY, TP: Rs617, Upside 8%)

Market share gains continue in both tea and salt; RM headwinds should normalize by 1QFY22

- While revenues were ahead of expectations, profitability fell short of expectations despite strong cost controls and premiumization.

- Other than the India tea business, most other businesses delivered a strong performance led by strong growth in the salt business, sequential recovery in Starbucks and Nourishco and strong profitability and growth in international beverages.

- While near-term margin headwinds remain for the tea business, sustained improvement in foods and international business margins should help offset that in addition to synergy benefits flowing in.

- Increase FY22E/FY23E EPS by 5%/8% to build in higher realizations in India businesses and better growth rates in international beverages

- We are building in a 12.5% revenue and 22.7% earnings CAGR over FY20-23E and reiterate our BUY rating with a revised SOTP-based TP of Rs 617 (from Rs 574), implying 48x/42x FY22/FY23E P/E.

Shares of Tata Consumer Products Limited was last trading in BSE at Rs.575.55 as compared to the previous close of Rs. 584.45. The total number of shares traded during the day was 271731 in over 11036 trades.

The stock hit an intraday high of Rs. 596.3 and intraday low of 567.25. The net turnover during the day was Rs. 156566034.

Source : Equity Bulls

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