Brokerages have maintained their bullish stance on Tata Consumer Products Ltd. after the company's second quarter results for fiscal year 2027, but reduced the price target for the stock.
Citi has retained its 'buy' rating on the stock, while cutting its price target from Rs 1,400 to Rs 1,225 as it factored in margin pressure for the Indian segment.
However, the brokerage remains positive as Tata Consumer was able to sustain growth momentum and sees sequential margin recovery through the second half of the financial year, with an estimated expansion of up to 50 basis points (50 bps)
It also underlined that pricing actions across multiple categories were yet to flow through fully, which would ultimately mitigate India margin pressures.
Stronger international and non-branded profitability provide further support at the consolidated level, Citi stated.
Goldman Sachs has also maintained a 'buy' rating on the stock, while cutting the price target to Rs 1,325 from Rs 1,440
The brokerage said that the company clocked a strong double digit volume growth with high teens EBITDA growth in a tough environment.
In the India business pricing is expected to significantly accelerate in the second half of the fiscal year.
‘Growth' businesses delivered 40% growth driven by Sampann and RTD, capital Foods and Organic India domestic growth stood at 24%, but exports were impacted due to shipping delays.
GS outlined that salt continued to deliver strong growth and an increase in prices will further accelerate revenue growth in H2. Even muted product segment like tea are expected to recover in the remaining 6 months for the FMCG major.
Jefferies retained a 'buy' call on Tata Consumer, as it accounted for quick commerce boom lifting the growth portfolio. Despite this, the brokerage has cut its price target to Rs 1,250 from an earlier Rs 1,450.
The company remains among Jefferies' preferred staple picks as second quarter growth was more than expected despite inflationary pressures in tea/salt. Going ahead, product price hikes should help.
The brokerage underlined that even as International revenue declined, margin expanded. FY27 guidance of 50-70bps year-on-year EBITDA margin expansion stays, as per Jefferies.
Tata Consumer Q2FY27 Highlights
Tata Consumer Products has reported a 16.2% year-on-year increase in consolidated net profit to Rs 469.3 crore for the second quarter of FY27, beating the estimate of Rs 469 crore. Net profit stood at Rs 404.46 crore in the year-ago period.Revenue rose 14% to Rs 5,661 crore from Rs 4,966 crore a year earlier, ahead of the estimate of Rs 5,583 crore.
Earnings before interest, taxes, depreciation and amortisation, or EBITDA, increased 19.7% to Rs 804 crore from Rs 671 crore. The figure was higher than the estimate of Rs 769 crore.EBITDA margin expanded to 14.2% from 13.5% a year earlier, beating the estimate of 13.8%.
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