Q4FY21 Result Update - Tata Consumer Products - ICICI Direct

Tata Consumer Product (TCPL) reported a mixed set of numbers with splendid growth in tea, salt & pulses categories. Revenue grew 26.3% led by robust 59.6% growth in India beverage (tea, coffee & Nourisco) segment & 22.4% growth in consumer foods business (salt, pulses). International beverages sales remained flat. Non branded business saw growth of 28.8%. With significant increase (~70%) in tea procurement prices, TCPL took staggered price hikes. However, price increases were insufficient to pass on entire cost inflation. The sharp increase in Indian tea prices led to a 623 bps contraction in gross margins. Though it was able to save 73 bps in employee spends, 42 bps in marketing spends & 214 bps in overhead spends, it was not enough offset the cost inflation. Operating profit de-grew 2.6% to Rs. 300.2 crore. Operating profit margins fell 290 bps to 9.9% in Q4FY21. The company incurred Rs. 63.9 crore expense on account of loss from disposal of overseas business entity. Moreover, loss from associates was Rs. 59 crore in Q4. With lower EBITDA margins & extraordinary expenses, PAT was at Rs. 74 crore against loss of Rs. 133 crore in corresponding quarter.

Valuation & Outlook

In the last few years, the company has divested all of its loss making overseas business. Moreover, with consolidation of foods business (salt & pulses) and acquisition of Soulful & stake in NourisCo, the company is looking to gain large footprint in the India food & beverage space. We remain positive on the company, valuing it at 50x FY23E PE with a revised target price of Rs. 725/share (earlier: Rs. 700) and maintain BUY rating.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TataConsumer_Q4FY21.pdf

Shares of Tata Consumer Products Limited was last trading in BSE at Rs.641.85 as compared to the previous close of Rs. 633.1. The total number of shares traded during the day was 170746 in over 3421 trades.

The stock hit an intraday high of Rs. 649.9 and intraday low of 626.3. The net turnover during the day was Rs. 109671876.

Source : Equity Bulls

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