Tata Consumer Gets Price Target Hike From Goldman Sachs — Check New Target Price

Goldman Sachs has maintained its 'buy' rating on Tata Consumer Products Ltd., raising its price target to Rs 1,290 from Rs 1,270, citing improved visibility of earnings and margin acceleration.

The brokerage firm is confident in the company's performance, projecting an improved margin recovery from the second half of the financial year 2026, primarily driven by a significant reduction in tea prices.

One of the primary reasons for the broking's positive stance is the clear sign of a recovery in Ebitda margins. With more than half of the June-November tea-buying season already finished, North India tea prices in 2025 have fallen by 15-20% compared to 2024. As the company buys tea during this period to cover its requirements for the next four quarters, this provides strong visibility for improved tea margins starting from the second half of the financial year 2026 and continuing into the financial year 2027.

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Unlike many other fast-moving consumer goods or FMCG firms that are facing disruptions from Goods and Services Tax rate changes, Tata Consumer is experiencing relatively limited headwinds. The company's core categories, including tea, salt, pulses, and spices, have seen no GST rate adjustments. This has led to minimal channel disruption and less de-stocking by retailers, giving Tata Consumer a distinct advantage over its peers. GST rates were only reduced for its Capital Foods and ready-to-drink beverages, which contribute a smaller portion of the company's overall revenue, which is about 10% to 15%.

The note also highlights the strengthening performance of Tata Consumer's core India segments. Tea and salt, which are well-established and highly penetrated categories, saw better volume growth in the first quarter of financial year 2026. This is expected to continue throughout the year as mass consumption in India revives.

Additionally, the non-branded business margins are projected to improve. This is attributed to a bounce back in coffee commodity prices over the past couple of months, which will provide support after a sharp correction in the first quarter of financial year 2026. The company’s "growth" segments, which experienced a slowdown in the first quarter due to a weak summer for ready-to-drink beverages and supply chain issues with Capital Foods, are also expected to recover as these temporary challenges fade.