Tata Consumer Products Ltd. has made headlines with its announcement of a dividend payout of ₹8.25 per share for the financial year 2025. This prominent player in the food and beverage sector, part of the Tata Group, has demonstrated robust performance, highlighted by a 6% Underlying Volume Growth (UVG) that has significantly bolstered revenue. Analysts from leading brokerages, including Citi Research, Jefferies, and JPMorgan, are optimistic about the company’s trajectory despite facing challenges in the current market.

Strong Financial Performance Amid Challenges

Despite a decline in Ebitda—down 1% to ₹620.95 crore—Tata Consumer’s quarterly results have impressed analysts. The company’s performance reflects strong revenue growth, driven by both its established tea business and recent expansions. However, the Indian market has experienced some setbacks, particularly due to rising tea costs, which have impacted profit margins.

• Ebitda comparison:
  • Current: ₹620.95 crore
  • Previous: ₹629.30 crore

The second-largest branded tea producer globally, Tata Consumer, is expected to rebound in the latter half of fiscal 2026 as commodity prices are anticipated to decrease, particularly during the new procurement cycle starting in July.

Analyst Insights on Tata Consumer’s Future

Brokerages have offered varied perspectives on Tata Consumer’s stock performance:

Citi Research: Buy Rating with Increased Target

Citi has maintained a ‘buy’ rating on Tata Consumer, raising its target price to ₹1,325, reflecting a potential upside of 15.3%. The brokerage noted that the company’s consistent disclosure of its 6% UVG marks a positive shift. While acknowledging the Ebitda decline due to high tea costs, Citi remains optimistic about future margin recovery, projecting a 23% earnings growth CAGR from FY 2025 to FY 2028.

Jefferies: Downgraded to Hold

Jefferies has adjusted its stance from ‘buy’ to ‘hold’ with a target price of ₹1,100, indicating a downside of 4.36%. The firm cited that while revenue growth has been strong, input costs—especially for tea—have pressured margins. They highlighted management’s comments regarding favorable tea prices in upcoming cycles but warned that profitability may remain challenged in the short term.

JPMorgan: Neutral Rating Maintained

JPMorgan has also retained a ‘neutral’ rating, increasing its target price to ₹1,100 from ₹970. They echoed concerns about high tea costs impacting margins, noting a 360 basis point decline in Ebitda margins for the India segment. However, they anticipate a favorable shift in tea prices and a good harvest, which could bolster profit margins.

Nuvama: Buy Recommendation with Slight Earnings Cut

Nuvama upgraded its target price to ₹1,335, implying a 16.08% upside potential. They maintained a ‘buy’ rating but slightly reduced earnings forecasts for FY 2026 and FY 2027. They noted competitive pressures in certain segments but expressed confidence in Tata Consumer’s strong market position helping to navigate near-term margin pressures.

Looking Ahead

As analysts predict continued margin pressure in the near future, there is a consensus that Tata Consumer is poised for recovery as tea costs stabilize. The company’s growth story, underscored by both its established product lines and new ventures, remains strong, positioning it well for the long term.

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