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Tata Consumer Products Ltd – Long-Term Investor Report

Lesson 190/225 | Study Time: 15 Min

Course: Top Quality Companies

Tata Consumer Products Ltd – Long-Term Investor Report

(All figures in ₹ Crores unless specified)

1. Company Overview

Tata Consumer Products Ltd. (TCPL), part of the Tata Group, is one of India’s largest FMCG companies. It has a strong portfolio of tea, coffee, packaged water, salt, pulses, spices, ready-to-cook foods, and beverages under brands like Tata Tea, Tetley, Eight O’Clock, Himalayan, Tata Salt, and Tata Sampann.

In recent years, the company has scaled up India Branded Foods & Beverages, while also building a global portfolio across tea and coffee markets. With entry into non-branded foods and premium packaged goods, TCPL is positioning itself as a holistic FMCG player.

2. Industry & Growth Prospects

FMCG Sector in India

Expected CAGR: 10–12% over the next decade.
Growth Drivers: Urbanisation, rising disposable incomes, e-commerce penetration, premiumisation, and health-conscious consumer trends.
Opportunities: Rural distribution, value-added products, and global tea/coffee exports.

TCPL’s Competitive Advantage

Strong brand equity with 200+ million Indian households.
Synergies with Tata Group distribution (Starbucks JV, Tata Digital tie-ups).
Premiumisation strategy in beverages, salt, and packaged foods.

3. Historical Performance (20 Years)

Year	Sales	Profit	Margin %
FY2005	8,063	248	3.1%
FY2010	5,855	390	6.7%
FY2015	8,063	248	3.1%
FY2020	9,637	460	4.8%
FY2022	12,425	1,015	8.2%
FY2024	15,205	1,300	8.5%
FY2025	17,618	1,380	7.8%
Tr. FY2026E	18,045	1,423	7.9%

Growth Rates:

20 Years: Sales CAGR 9%, Profit CAGR 10%
10 Years: Sales CAGR 8%, Profit CAGR 19%
5 Years: Sales CAGR 13%, Profit CAGR 25%

Margins improved from ~3% (2002–05) → ~8% now.

4. Latest Q1 FY26 Highlights

Metric	Q1 FY26	Q1 FY25	Growth
Sales	4,779	4,352	+10%
Profit	332	289	+15%
EPS	3.38	3.02	+12%
Margin	6.9%	6.6%	+0.3%
ICR	13	6	+144%

👉 Despite double-digit revenue growth, margins remain below peak levels due to higher material and stock costs.

5. Segmental Growth (Q1 FY26)

Segment	Revenue	Share	Growth
India Branded	3,126	65%	+11%
International	1,145	24%	+9%
Non-Branded	536	11%	+7%
Others	10	0%	-17%

👉 Growth remains broad-based, led by India Branded business.

6. Cost Structure (Q1 FY26)

Cost Head	₹ Cr	% of Sales	Growth
Material	2,037	47%	+21%
Stock	947	22%	+12%
Other Costs	924	21%	-2%
Employee	385	9%	+12%
D&A	149	3%	+1%
Finance	34	1%	-64%

7. Valuation Trends

PE Range (FY2020–FY2026): 39–103 historically, currently ~66–93.
PBV Range: 3.7–7.5 recent, currently ~4.4–6.2.
Long-term sustainable range: PE 55–85, PBV 4–6, given sector peers.

8. Forward Estimates

Year	Sales	Profit	EPS	Book Value	Blended Fair Value
FY2026E	20,085	1,396	13.2	207	~₹746
FY2030E	32,747	2,489	24.0	262	~₹1,169
FY2035E	57,712	4,386	41.0	350	~₹1,893

9. Peer Comparison (FY25)

Company	Sales (₹ Cr)	Profit (₹ Cr)	Margin %	PE Range	PBV
Tata Consumer	17,618	1,380	7.8%	68–95	4.4–6.2
HUL	62,800	9,800	15.6%	50–75	8–10
Nestle India	22,500	3,900	17.3%	65–80	15+
ITC (FMCG+Agri)	76,000	20,500	27.0%	20–35	5–6

👉 Tata Consumer trades at a premium vs ITC, closer to Nestle / HUL multiples, though margins are lower.

10. Portfolio Allocation

Current Price: ~₹1,073
Strategic Weightage: 2% in long-term portfolio
Tactical Weightage: ~1.06% (based on valuation factors)

11. Risks & Rewards

Positives:
✅ Diversified FMCG portfolio with strong brands
✅ Consistent double-digit sales growth
✅ Expansion into premium, health & wellness categories

Risks:
⚠️ Global tea/coffee volatility
⚠️ Rising raw material costs impacting margins
⚠️ Valuations already factoring in strong growth

Conclusion

Tata Consumer is evolving into a strong FMCG play beyond tea & salt. With consistent growth, expanding premium categories, and strong Tata brand equity, it is a long-term compounder. However, valuations are rich, and sustained margin expansion will be key to justify upside.

Disclosure: This is an unbiased educational analysis, not a buy/sell recommendation.

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Piyush Patel

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