Tata Consumer shares fall despite positive Q1 numbers; brokerages remain bullish

Morgan Stanley has an overweight rating on the stock with the target price of Rs 863.

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Tata Consumer Products shares were down 1.77 percent at 858.45 at 10.01 am on the National Stock Exchange despite the company reporting a 30 percent increase in net profit in the April-to-June quarter as compared to the same quarter a year before. Net profit for Q1FY24 was at Rs 359 crore.

Morgan Stanley has an overweight rating on the stock with the target price of Rs 863. The brokerage firm said that strong growth trends in salt and Sampann business are positives for Tata Consumer. However, the company losing its market share in the tea business is a negative element for the company. Revenue from salt business and Sampann business grew 18 percent and 51 percent respectively year-on-year in Q1FY24.

Nuvama Institutional Equities has a buy rating on the stock with the target price of Rs 925. “Overall, the worst seems to be behind for the India tea business and international margins, and FY24 is likely to be better with Q1FY24 showing some decent improvement,” said the brokerage firm in a research report.

Tata Consumers’ revenue from operations grew 12 percent to Rs 3,741 crore year-on-year in Q1FY24. Nourishco brand revenues witnessed the highest growth of 64 percent among other Tata Consumers portfolio. Products like Tata Gluco and Tata Copper were the top performers of Nourishco brand.

Revenue from Starbucks business grew 21 percent year-on-year and Starbucks added 16 new stores during the April-to-June quarter. For Tata Coffee revenue grew 11 percent year-on-year in Q1FY24. The Vietnam coffee business performed well, with strong sales and improved profitability, supported by increased sales of premium products.

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