Shares of Tata Consumer Products surged over 8% on Wednesday, April 2, 2025, after global brokerage firm Goldman Sachs upgraded its rating to 'Buy' and raised its target price significantly. The stock opened at ₹1,010.05, reflecting a 1.8% increase from the previous close of ₹991.90. By mid-morning, it had hit an intraday high of ₹1,073.55, buoyed by strong trading volume.
Goldman Sachs raised its target price for Tata Consumer Products from ₹1,040 to ₹1,200, suggesting a potential upside of 21% from the last closing price. The brokerage highlighted expectations of robust earnings per share (EPS) growth over the financial years 2025 to 2027, driven by a recovery in tea margins through price hikes.
Despite the competitive nature of the fast-moving consumer goods (FMCG) sector, Goldman Sachs expressed optimism, stating that the worst appears to be behind the company. This sentiment is bolstered by a reduction in net interest costs as the company pays down acquisition-related debt, which should enhance its financial stability.
In its most recent quarterly earnings report for the third quarter of FY25, Tata Consumer Products reported a net profit of ₹279 crore, unchanged from the same period last year. Revenue, however, rose by 17% year-on-year to ₹4,444 crore, indicating strong sales performance despite ongoing cost pressures.
The company's consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) was stable at ₹578 crore, but margins contracted due to rising costs, particularly in tea, which represents nearly 60% of the company's revenue. The Indian business, which includes packaged products like pulses and spices, saw a significant 43% drop in profit during the quarter due to surging tea prices.
On the trading front, Tata Consumer Products' shares have shown a mixed performance over the past year. While the stock has dropped 7.5% overall, it has gained 12.9% year-to-date as of April 2, 2025. The stock's 52-week high was recorded at ₹1,247.75 on July 24, 2024, and its low was ₹884 on December 20, 2024.
In addition to Goldman Sachs, Nomura has also reiterated a 'Buy' rating for Tata Consumer Products, setting a target price of ₹1,250. Conversely, CLSA has maintained a 'Hold' rating but reduced its target price from ₹1,049 to ₹992.
Despite the positive news, Tata Consumer Products has faced challenges, including a recent income tax demand of ₹262.08 crore for the financial year 2021-22. The company stated that it would appeal against this assessment order, asserting that it would not impact its financials or operations in the immediate term.
As the company continues to focus on innovation and distribution expansion, analysts remain hopeful about its long-term growth prospects. The positive outlook from major brokerages, combined with the company's strategic initiatives, positions Tata Consumer Products well in the competitive FMCG landscape.
In summary, Tata Consumer Products' stock rally on April 2, 2025, reflects a combination of favorable analyst ratings, strong sales growth, and strategic financial management. With the market capitalization standing at ₹1,03,585.19 crore, the firm remains a significant player in the FMCG sector, navigating challenges while aiming for robust future growth.
