Shares of Tata Consumer Products have gained 74.75 per cent in the past one year. The counter was last seen at Rs 1,201.30 on Thursday. Nuvama Institutional Equities, in its recent report, retained a 'Buy' call on the counter with a revised 12-month target price of Rs 1,400 from earlier Rs 1,340.
The domestic brokerage said that the Tata Group company continues to drive growth via portfolio enhancements, distribution expansion and foray into new segments.
"E-commerce now contributes 10.7 per cent to India business. Tata Consumer retained its tea market share in e-commerce for a 33rd consecutive month. Until last year, branded tea was facing inflation; due to this, the firm faced down-trading by consumers. However, over the last few quarters, tea prices have begun to soften and volumes have started turning positive aided by proactive steps," Nuvama stated.
"The company had earlier hiked salt prices sharply, but now salt prices are stable and volumes have started to kick in. For NourishCo, the FY24 target for NourishCo is Rs 900–1,000 crore. Q3 is a slow quarter due to seasonality in north India. Q4 would be a higher number as the summer season sets in. Himalayan, Tata Gluco and Tata Copper sustained strong growth, with Copper growing faster than Gluco. Water contributes 50 per cent to NourishCo's top line," it further stated.
After acquiring Capital Foods and Organic India, the company said it is open to more acquisitions. According to a top company executive, the company will focus on new acquisitions that offer operational value. It plans to operate a dedicated pharma distribution network with Organic India's product offerings, including capsules with Tulsi, Ashwagandha and Triphala.
Nuvama said the company has expressed interest in various platforms such as pantry and mini meals, as well as proteins.
The brokerage also mentioned that Tata Consumer has set a target to integrate its newest acquisitions, Capital Foods (Rs 5,100 crore) and Organic India (Rs 1,900 crore), into the business within 100 days.
"Salience of Growth business to India business stands at 17 per cent; it shall exit FY24 at 20 per cent of revenue contribution. Targeting to exit FY24 with growth business contributing 30 per cent to India business. The profitability of growth businesses continues to improve meaningfully. In Q3 FY24, growth businesses jumped 42 per cent on a year-on-year (YoY) basis," Nuvama further stated.
As of December 2023, promoters held a 33.56 per cent stake in Tata Consumer.