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ICICI Securities Report
ICICI Securities upgrades its stance on Tata Consumer Products Ltd. to Buy from Add and value the stock on an SoTP-based revised target price of Rs 1,450 (vs Rs 1,200 earlier).
The brokerage has increased its earnings estimates by 6/9(%) for FY27/28E and model revenue/Ebitda/adjusted PAT CAGRs of 15%/21%/28% over FY26–28E.
Tata Consumer's FY26 performance increasingly suggests that the business is moving beyond a portfolio led largely by tea and salt into a more scaled and diversified food and beverage platform.
The brokerage believes the quality of growth remains strong:
- Growth businesses now contribute 33% of the India portfolio, reducing the dependence on core categories;
- Foods, RTD and coffee continue to scale well, supported by sharper execution, distribution expansion and sustained innovation; and
- India business margins continue to improve, despite constant investments in brands and GTM expansion, indicating better operating leverage as newer businesses gain scale.
The consistency of delivery across categories strengthens confidence in Tata Consumer's medium-term growth trajectory.
ICICI Securities optimistic stance remains. Hence upgrade to Buy from Add after one-/two-year absolute, relative (to Nifty) near-flat stock performance.
Risks:
Higher-than-expected competitive pressures, steep increase in commodity prices and failure of new products.
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