Buy Tata Consumer Products, target price Rs 890: ICICI Securities

has buy call on Tata Consumer Products with a target price of Rs 890. The current market price of Tata Consumer Products is Rs 756.45.

Time period given by analyst is one year when Tata Consumer Products price can reach defined target.
Tata Consumer Products Ltd., incorporated in the year 1962, is a Large Cap company (having a market cap of Rs 69784.50 Crore) operating in FMCG sector.

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 3036.47 Crore, down -1.42 % from last quarter Total Income of Rs 3080.18 Crore and up 10.55 % from last year same quarter Total Income of Rs 2746.62 Crore. Company reported net profit after tax of Rs 240.65 Crore in latest quarter.

Investment Rationale
While TCPL had not-so-easy macros to tackle (including (abnormally) high input inflation) in India and higher base in International (pantry up-stocking in Q1FY21), it continued to gain market shares. It gained 170bps market shares in India Tea and 370bps in Salt. It also gained shares in regular and specialty tea in Canada. While near-term impact of steep inflation in input prices is unavoidable, we highlight that market share gains are DCF-accretive. We model it to gain market shares in FY21-23 due to (1) expansion of direct coverage and strengthening of rural distribution, (2) differentiated launches and (3) premiumization (premium salt grew 34% in Q1FY22). TCPL has largely completed integration of Soulfull with expansion of GT outlet reach by 3x. Quick integration is comforting and provides significant confidence about new bolt-on acquisitions (if any). Starbucks also reported V-shaped recovery in revenues immediately after lifting of lockdown. The brokerage maintains BUY with SoTP-based target price of Rs890.

Promoter/FII Holdings
Promoters held 34.7 per cent stake in the company as of June 30, 2021, while FIIs held 25.6 per cent, DIIs 13.4 per cent and public and others 26.3 per cent.