'Hold' Tata Consumer Shares Maintains Systematix Post Weak Q1 Results

Tata Consumer Products’ delivered weak Q1 FY26 operating earnings with Ebitda decline of 9% YoY, broadly in-line with expectations but materially below consensus estimates, while revenue grew 10% YoY in-line with the brokerage/ consensus estimates (India branded volume growth of 6.8% YoY).

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Systematix Report

We believe Tata Consumer Products Ltd.'s tea margins have likely troughed in Q1 FY26 and should revive materially over the rest of FY26E as costs ease. We expect Sampann to remain the key growth engine and sustain strong double-digit growth, with strong growth seen across pulses (huge headroom for growth with branded only 1% of the market), dry fruits, breakfast cereals (poha) and cold-pressed oils.

Salt business growth will likely be driven by strong growth in value-added salts and pricing.

While management indicated resumption of 30% growth for NourishCo and CF/OI along with margin stabilization for the non-branded business, we believe high competitive intensity in beverages, volatile coffee costs (coming off sharply high levels) and delayed delivery of CF/OI business-case growth could take time to resolve.

We therefore lower our FY26E-FY27E revenue/ Ebitda estimates by 2-3%/ 5-6%; we introduce FY28E estimates, and build FY25-FY28E revenue/ Ebitda CAGR of 9.5%/ 11%.

We maintain Hold rating on Tata Consumer; we roll forward valuation to June-2027E EPS (from March-2027E) and value the stock on a P/E of 56x, resulting in a revised target price of Rs 1,100 (vs Rs 1,175 earlier).

While we remain positive on prospects of double-digit growth and improving profitability, we await a better entry point for the stock.

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