In a notable turn of events, Tata Consumer Products saw its share price drop by over 4% in early trading on Thursday following the release of its Q4 financial results. The stock took a hit, falling as much as 4.54% to ₹1,098.60 on the BSE, raising concerns among investors despite the company’s impressive profit growth.
Strong Profit Growth Amidst Declining Shares
Tata Consumer Products, a key player in the FMCG sector under the Tata Group, reported a staggering 59% year-on-year (YoY) increase in consolidated net profit for the fourth quarter of FY25, soaring to ₹345 crore from ₹216.63 crore during the same quarter last year.
- Revenue from operations also saw a significant boost, climbing 17.2% to reach ₹4,602.3 crore, up from ₹3,927 crore in the previous year.
- However, the operational side revealed a slight setback, as EBITDA dropped 1.4% YoY to ₹620.8 crore, with the EBITDA margin contracting by 256 basis points to 13.5%.
Future Growth Prospects and Market Sentiment
Looking ahead, Tata Consumer Products has set ambitious goals for consistent double-digit revenue growth, with expectations for EBITDA to outpace revenue growth. Analysts pointed out that while the tea volume growth in India was a modest 2%, which fell short of projections, there are indications that profit margins could stabilize soon.
Motilal Oswal Financial Services commented on the potential for recovery in margins, particularly within the Indian beverage market, driven by:
- Price increases in tea and salt.
- Stabilization of input costs.
- Promising signs of improved tea crop yields during the upcoming harvest season (March/April 2025).
The brokerage firm expects Tata Consumer Products to achieve a CAGR of 8% in revenue, 13% in EBITDA, and 20% in profit after tax (PAT) from FY2025 to FY2027. They reiterated a ‘Buy’ rating on Tata Consumer Products, raising the target price to ₹1,360 per share.
Updated Earnings Projections and Technical Analysis
Meanwhile, Nuvama Institutional Equities has slightly adjusted its FY26E and FY27E earnings per share estimates down by 1.3% and 1.7%, respectively, while increasing the price target for Tata Consumer Products to ₹1,335 from the previous ₹1,255. The overall recommendation remains a ‘Buy’ on this Tata Group stock.
From a technical perspective, Anshul Jain, Head of Research at Lakshmishree Investments, noted that the share price has established a 25-week rectangle on weekly charts. It recently surged past the rectangle high of ₹1,072, indicating a solid base for future growth.
- Sustaining above ₹1,160 is crucial for a rally, potentially paving the way towards the ₹1,240 price zone.
- Conversely, any decline towards ₹1,072 could present a buying opportunity for strategic investors.
As of 9:25 AM, Tata Consumer Products shares were trading 2.65% lower at ₹1,120.35 on the BSE, leaving investors keenly watching the market for further developments.
In summary, while the immediate market reaction has been negative, the long-term outlook for Tata Consumer Products remains positive, driven by strategic initiatives and a resilient business model.
