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Tata Consumer Products Limited- 6 Point Stock Analysis

Tata Consumer Products Limited- 6 Point Stock Analysis

Published on 07 April 2021 Views 182 Comments 0

In this blog, we will be analysing the stock of Tata Consumer Products Limited (TCPL) on a 6 point basis.

Introduction: Tata Consumer Product Annual Report

Tata Consumer Products Limited (TCPL) is a subsidiary company of Tata Group involved in Integrated Food and Beverage Company. TCPL is havings their presence in India and foreign countries like Canada, UK, North America, etc. TCPL is the second-largest tea company globally and has an impressive market share in other products.

6 Point Stock Analysis - Tata Consumer Products Value Research

i) FMCG:

  • Tata Consumer Products Limited (TCPL) presents the view of complete focus towards FMCG.

  • Earlier, Tata Global Beverages was a different entity; another consumer product line was in their Tata Chemical Business. But then Tata Group focused on making a dedicated FMCG Company.

  • Now Tata Consumer Products is not only an FMCG Company, but it is a multi-category FMCG Company. Multi-category FMCG involves Tea, Coffee, Packaged Water, Foods, etc.

ii) Distribution:

  • Tata Consumer Products is also challenging the unorganised sector. The Company is stressing a lot upon Distribution side also. Further company is not only addressing urban areas but rural areas as well.

  • As an approaching step, Tata Consumers are increasing distributors by three times in rural areas.

  • This shows the focus of the company towards unorganised business-like pulses, spices, etc.

iii) High Margin Business:

  • The company is having significant plans in the high-margin business.

  • In this context, Company is also concentration on Niche Packaged Products where high margins are available.

  • Under this product line, Snacks, Breakfast Cereals, Packaged Water, Branded Coffee, Artificial Sweetener, etc., the company has focused a lot.

  • In addition to this, Consumers already have a soft corner for Tata’s brand name, which can also work well.

iv) Nifty Inclusion:

  • Recently, Tata Consumer Products Limited has been included in Nifty 50.

  • Inclusion of the stock in the Nifty 50 will be very beneficial to the company.

  • There is a good flow of passive funds in India. These passive funds come from Foreign Institutional Investors (FIIs) and domestic institutional investors (DIIs) like EPF, NPS, etc.

  • These passive funds generally focused on Nifty 50 or Sensex.

  • Since Tata Consumer is part of an index, there will be a flow of passive funds.

  • Currently, TCPL has a weightage of less than 1% in the Index, but in the future, increasing rising profits, rising market capitalisation, and other factors may also increase.

  • If everything goes well on the company side, the stock may also make its position in Sensex.

v) OPM Growth in Sight: - Tata Consumer Products Growth

  • Here, we need to look at the Merger Synergies of the TCPL.

  • In 2019, Consumer Products from Tata Chemicals were withdrawn, and Tata Global Beverages were merged into these company, and Tata Consumer Products Limited was formed.

  • These synergies and the complete focus towards consumption by the company will undoubtedly increase the operating profit margin of the TCPL.

  • Also, there is no need to spend on the supply chain for the company and can continue with the existing one. This will reduce the cost, and hence Operating Profit Margin (OPM) will boost.

  • Typically, this will enhance the Operating Leverage and ultimately the Operating Profit Margin of the company.

  • TCPL is also focusing on International Business. Recently, Company has exited Joint Venture with two foreign companies, namely Empirical Group and Southern Tea.

  • And, The company is looking towards promoting their brands like Tea, etc.,  in International Market.

vi) Market Leadership:

  • In Tea Business, Tata Tea is in the first position in the market.

  • Also, Tata Consumer Products Share Value of around 65%, Tata Salt is the leader in the market.

  • And with so many new products company is challenging the unorganised sector, which may also result in further market leaders in the coming time.

Conclusion - Growth Rate of Tata Consumer Products 

The journey of Tata Consumer Products Limited will be an interesting thing to watch. The above-discussed 6-point stock analysis prospects the great potential of the stock. Accordingly, one should keep this stock on his/her radar but allocate funds in this stock only after proper research.

 

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