Rs 259 to Rs 851 in five years: Can this Tata Group stock rally further?

Shares of multibagger Tata Consumer Products Ltd (TCPL) have delivered  229% returns in the last five years. The FMCG stock, which closed at Rs 258.85 on July 13, 2018 ended at Rs 851.30 on July 14, 2023 on BSE. An amount of Rs 1 lakh invested in the Tata Consumer Products stock five years ago would have turned into Rs 3.28 lakh today. In comparison, Sensex has risen 82 per cent during the period.    

Tata Consumer shares have grown 103% and 475% in the last three and ten years, respectively.  

 The stock closed 1.69% higher in the last trading session. The stock of FMCG arm of the Tata Group opened flat at Rs 837.40 in the previous session on BSE. It rose to an intraday high of Rs 852.70 during the session. The stock hit a 52-week low of Rs 685 on March 16, 2023 and a 52-week high of Rs 877 on June 21 this year.  

Total 31,064 shares of the firm changed hands amounting to a turnover of Rs 2.62 crore in Friday’s session. Market cap of the firm climbed to Rs 79170 crore on BSE.     

Brokerage Citi has assigned a target price of Rs 1020 to the Tata Consumer stock. It has initiated coverage of the stock with a buy call.

"We value Tata Consumer on a SoTP-based approach given different stages  of  growth/profitability across segments. Our Rs 1,020 target price implies a multiple of 56x Mar-25E, 5% premium to the stock's 3-year historical avg. Market share gains and  premiumisation  in core categories, increasing salience of new categories and improving financial metrics could keep absolute multiples elevated. Our picking in India staples is now Hindustan Unilever,  Godrej Consumer and Tata Consumer," said Citi.

 Abhijeet from Tips2trades said, "Tata Consumer looks bullish on the Daily charts with strong support at Rs 822. A daily close above resistance of Rs 854 could lead to target of Rs 899 in the near term." 

Brokerage Sharekhan said, “The FMCG arm of the Tata Group can breach the Rs 1,000 mark on strengthening of the core business and expansion in addressable market to clock steady double-digit earnings growth in the medium to long run  (revenues/PAT grew at  CAGR of 13%/20% over FY20-23).” It has assigned a buy call to the Tata Consumer stock with a target price of Rs 1010. 

“With a strong focus on achieving consistent earnings growth, simplifying business model, and enhancing shareholder value, TCPL remains one of our top picks in the FMCG space. We maintain a Buy on the stock with a revised PT of Rs 1,010. It trades at 53.7x/45.1x its FY2024E/FY2025E EPS,” said Sharekhan.   

Vaishali Parekh, Vice President - Technical Research at Prabhudas Lilladher said, "Tata Consumer is on the verge of a breakout above Rs 860-870 levels on the daily chart and once a confirmation is established thereafter we can anticipate for further rise in the coming days. The near term support is around Rs 825 zone where it has indicated a higher bottom formation pattern. The RSI, also showing a trend reversal, has signaled a buy. We suggest buying and accumulating this stock for an upside target of Rs 900-920 levels while keeping the stop loss at Rs 825."

In terms of technicals, the relative strength index (RSI) of Tata Consumer Products stands at 57.6, signaling it's trading neither in the overbought nor in the oversold territory. Tata Consumer Products stock has a one-year beta of 0.8, indicating low volatility during the period.  The stock is trading higher than the 5 day, 10 day, 20 day, 50 day, 100  day and 200 day moving averages.       

The firm logged a 23.5% rise in net profit to Rs 268.6 crore for the quarter ended March 2023 as against net profit of Rs 217.54 crore during the quarter ended March 2022. Sales zoomed 14% to Rs 3619 crore in the quarter ended March 2023 as against Rs 3175 crore during the quarter ended March 2022. 

The board recommended a final dividend of Rs 8.45 per equity for the financial year. The dividend, if approved by the members at the ensuing annual general meeting, will be paid after the AGM and within 30 days of its declaration, Tata Consumer Products said.  

Also read: Hot stocks on July 17, 2023: Adani Enterprises, Yes Bank, Subex, Mazagon Dock, others

Also read: Bandhan Bank share price targets see steep cuts post Q1 results. Here's why

Also read: Adani Power, HDFC Bank, LTTS: How should you trade these buzzing stocks