JP Morgan remained positive on FMCG giant Tata Consumers amid an improving demand graph. "Demand bottomed out in Sep-Oct 24 and is improving with better rural sentiment, easing food inflation and an anticipated good monsoon being tailwinds," stated the firm in its report. Additionally, it noted that while general trade seems to be slumping in urban areas, that has more to do with a preference shift to e-commerce and quick commerce.
Other factors backing Tata Cons and the research firm's stance on it include possible revenue growth led by the core tea/salt business, steady expansion of Ebitda margins owing to contributions from "value-added segments (in tea, salt), and improving profitability of Sampann/Soulfull along with faster growth in higher-margin categories, such as Capital Foods & Organic India". And lastly, an expected growth in international markets.
In India, the driving forces for Tata Cons are projected to be the tea and salt markets. "Tea prices have eased, and with an anticipated good harvest (peak season Jul-Oct), margins are expected to revert to normalcy from the end of Q2 FY26. Salience of the mass-premium & premium segments has risen to 2/3, and innovation focus will remain on these segments," remarked JPMorgan.
This, grouped with Sampann-Profitable Scale-up, progress in distribution infrastructure, portfolio expansion for capital foods, and ramped-up exports for organic India, will further growth for the company.
The research firm holds that Tata cons "see scope to expand GT network (reach: 4.5 million outlets vs universe: 9 million+) with use of split sales-force team for better servicing."
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