Tata Consumer Products share price has delivered 103% returns in over three months. Share price of Tata Group firm, which stood at Rs 214 on March 24, 2020, rose to Rs 436 on July 8, doubling wealth of investors during the period. An investment of Rs 1 lakh in this stock on March 24 would have turned to Rs 2.03 lakh on July 8. The stock fell to its 52-week low of Rs 214 on March 24 after rising coronavirus cases dampened market sentiment across the globe.
Share of Tata Consumer Products, an Indian multinational non-alcoholic beverages company, fell 46% from its high of Rs 396 hit on February 14 this year to its fresh 52-week low. However, the large cap stock soon charted a recovery path followed by a rebound in global and domestic equities.
The share hit its all-time high of Rs 436 today gaining 5.67% intra day against previous close of Rs 412.60 on BSE. The rise came after brokerage Credit Suisse initiated coverage with an outperform rating with a target price of Rs 490 on the Tata Group firm stock.
Credit Suisse sees the potential for faster growth in the tea and salt business and said long-term prospects of Starbucks were intact.
"We expect a 16% earnings CAGR (compounded annual growth rate) over FY20-23 which will be ahead of the industry and ROIC (return on invested capital) at 34% by FY23," said Credit Suisse.
"We expect high single-digit growth in tea and salt on share gains from loose and smaller brands which form the majority of market share in these categories. In salt, TCL is the only national player with 30% market share," said Credit Suisse.
"The COVID-19 lockdown is likely to accelerate growth for national-branded players in these categories," it added. The share closed 4.77% or Rs 19.70 higher at Rs 432.30.
For quarter ended March 2020, the firm reported a net loss of Rs 122.48 crore against a net profit of Rs 35.99 crore in the January-March period a year ago.
Net sales rose 35.45 per cent to Rs 2,405.03 crore in Q4 against Rs 1,775.46 crore in the same period in the year-ago period. The company was renamed Tata Consumer Products Ltd after merging the consumer products business of Tata Chemicals with Tata Global Beverages. It owns brands such as Tata Salt, Tata Tea, Tetley, Eight O''Clock Coffee and Himalayan water.
"This is the maiden result of the combined entity," the company said.
TCPL Managing Director and CEO Sunil D'Souza said, "Nearly all our businesses have recorded good growth during the quarter. It has in many ways, been an unprecedented time for the organization in recent months and we geared up successfully to make sure our essential products reach consumers during this period."
The company was able to adapt quickly to changes in consumer trends and buying behaviour through our delivery channels, he added.
Total expenses stood at Rs 2,179.41 crore in Q4 compared to Rs 1,649.65 crore in corresponding quarter of previous fiscal. In last fiscal, Tata Consumer Products' reported net profit of Rs 460.11 crore, up 0.68 per cent from Rs 456.98 crore in the previous year.
Net sales in 2019-20 stood at Rs 9,637.42 crore, a gain of 32.90 per cent, compared to Rs 7,251.50 crore in 2018-19.
Tata Consumer Products Ltd, formerly Tata Global Beverages Limited, is a beverage company engaged in the trading, production and distribution of tea, coffee and water. The company's activities include processing and blending of tea, including manufacture of instant tea.
The firm has beverage operations in India, Europe, the United States, Canada and Australia, plantation business in India/Sri Lanka and extraction business in India and the United States.