FMCG major Tata Consumer Products gained 3% to Rs 1,123 on the BSE on Monday after reporting a 27.8% year-on-year (YoY) rise in consolidated net profit to Rs 427 crore for the April-June quarter of FY27, compared with Rs 334 crore in the year-ago period.
Revenue from operations rose 11.9% YoY to Rs 5,349 crore in Q1 FY27 from Rs 4,779 crore in the corresponding quarter of the previous financial year. Total expenses also increased 11% YoY to Rs 4,829 crore during the quarter.
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Nomura, with a Buy rating and a target price of Rs 1,475 (36% upside), said Tata Consumer introduced calibrated price hikes of 1-2% in tea and 6% in salt in June, which should support both sales growth and margins. With tea inflation currently at around 7-10% and new crop procurement still in the early stages, management has indicated that further price hikes, likely towards the end of Q2, will be implemented to protect margins. Nomura expects early double-digit sales growth to continue in FY27F.
The brokerage marginally revised its FY27F-FY29F EPS estimates to factor in lower tea growth due to price cuts and forecasts a 16.5% EPS CAGR over FY26-FY29F. It values Tata Consumer using a DCF model and has raised its target price to Rs 1,475 from Rs 1,450, implying a target P/E multiple of 60x. Key risks include weaker growth in the company's growth businesses and margin pressure.
JM Financial also assigned a Buy rating with a target price of Rs 1,225 (13% upside). It said Tata Consumer's Q1 FY27 sales and EBITDA performance were in line with its expectations. Key positives included healthy acceleration in growth businesses, led by Tata Sampann, which grew 58%, NourishCo, and a strong 40% recovery in Capital Foods, along with better-than-expected gross margins supported by benign tea prices and improved international margins.
The brokerage expects sustained momentum in growth businesses, stable international operations, and a recovery in domestic volumes to support double-digit revenue growth. It expects price hikes, year-on-year moderation in coffee prices—which should benefit international margins—operating leverage, and cost-saving initiatives to drive EBITDA margin expansion, with the company reiterating its guidance for a 50-70 bps expansion in FY27.
Nuvama retained its Buy rating and target price of Rs 1,435 per share, saying the company's Q1 results were broadly in line with expectations. The brokerage highlighted 14 new product launches during the quarter, which it said strengthened Tata Consumer's innovation pipeline. However, revenue from the non-branded business declined 10% YoY in constant currency terms.
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"We delivered yet another quarter of double-digit topline growth, backed by volume growth," Tata Consumer Products Managing Director and CEO Sunil D'Souza said. He said the India business recorded robust underlying volume growth, reflecting the company's continued focus on execution, category expansion and innovation.
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D'Souza added that the company's "Growth" businesses performed strongly and increased their overall contribution to the India business. Tata Sampann continued to deliver exceptional growth, supported by strong performance across dry fruits, cold-pressed oils, core pulses and spices. The Ready-To-Drink business also had a strong quarter, with growth across its core brands as well as new launches, he said.
Over a longer period, however, Tata Consumer shares have gained 2% in a year, 28% in three years and more than 42% in five years. The company has a market capitalisation of over Rs 1.08 lakh crore.
