Mehabe score: 6 G Factor: 5 Piotski Score: 7 The stock has a rating HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 5 and Piotski score of 7.
Description
Tata Consumer Products Ltd. is one of the leading companies of the Tata Group, with presence in the food and beverages business in India and internationally. It is the second largest tea company globally and has significant market presence and leadership in many markets. In addition to South Asia (mainly India), it has presence in various other geographies including Canada, UK, North America, Australia, Europe, Middle East and Africa.
Main Points
Acquisition of Food Business
The company acquired the consumer products business of Tata Chemicals Ltd # that comprises sourcing, packaging, marketing, distribution and sales of salt under the brand ‘Tata Salt’, and spices, pulses and other food products under the brand ‘Tata Sampann’ in FY2020 in an all equity deal.Site:TATACONSUMMain Symbol:TATACONSUM
Stock trades at 768.0, above its 50dma 735.96. It also trades above its 200dma 634.79. The stock remains bullish on techicals
The 52 week high is at 788.15 and the 52week low is at 427.55
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– has delivered good profit growth of 151.35% CAGR over last 5 years
– has been maintaining a healthy dividend payout of 45.45%
-Debtor days have improved from 31.05 to 23.95 days.
Weakness
– Stock is trading at 4.87 times its book value
– has a low return on equity of 5.96% for last 3 years.
Competition
– The industry trades at a mean P/E of 14.7x. Tata Consumer trades at the industry’s max P/E of 91.99x. TATACONSUM trades at a P/E of 92.0x
– Industry’s mean G-Factor is 3.0 while the mean Piotski score is 9.0. TATACONSUM has a G-Factor of 5 and Piotski scoreof 7.
– Average 1 month return for industry is 10.9%. The max 1- month return was given by Rossell India: a return of 29.63 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 3008.0 cr compared to Rs 2714.0 cr for period ended Jun 2020, a rise of 10.8%
Operating Profits reported at Rs 399.0 cr for period ended Jun 2021 vis-vis 483.0 for period ended Jun 2020 .
Operating Margins contracted -453.2 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 2.01 compared to Rs 0.58 for previous quarter ended Mar 2021 and Rs 3.55 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 11897.0 cr for period ended TTM vis-vis sales of Rs 11602.0 cr for the period ended Mar 2021, a growth of 2.5%. The 3 year sales cagr stood at 17.9%.
Net Profit reported at Rs 714.0 cr for period ended TTM vis-vis sales of Rs 857.0 cr for the period ended Mar 2021, falling 20.0%.
Company recorded a healthy Net Profit CAGR of 20.5% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 1656.0 cr for period ended Mar 2021 vis-vis Rs 1082.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 6.0% compared to 6.0% over the last 3 Years. – The stock has given a return of 77% on a 1 Year basis vis-vis a return of 48% over the last 3 Years. – The compounded sales growth on a TTM bassis is 19% vis-vis a compounded sales growth of 19% over the last 3 Years. – The compounded profit growth on a TTM basis is 8% vis-vis a compounded profit growth of 21% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 25.02% vis-vis 25.24% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 26.27% vis-vis 27.48% for Mar 2021
Conclusion
– is almost debt free.
– has delivered good profit growth of 151.35% CAGR over last 5 years
– has been maintaining a healthy dividend payout of 45.45%
-Debtor days have improved from 31.05 to 23.95 days. – Stock is trading at 4.87 times its book value
– has a low return on equity of 5.96% for last 3 years.
The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
Technically, the stock remains above its 50 DMA 735.96 and is trading at 768.0, thus bullish price action wise.
