Motilal Oswal has reiterated its 'Buy' rating on Tata Consumer Products with a target price of ₹1,230, implying around 21% upside from the current market price of ₹953.10. According to the latest brokerage report, the company is positioned for strong growth despite challenges in its core tea business segment, with the growth portfolio emerging as the next major growth engine. However, consensus estimates from 17 recent research reports suggest an even higher upside potential of 38.7% over 12 months, with an average share price target of ₹1,343, representing a 40.42% upside from current levels. The stock closed 0.22% higher at ₹953.10 per share on Friday, showing marginal gains after experiencing 13.88% decline over the last three months.
The Tata Consumer Products growth portfolio has undergone a dramatic transformation, increasing its contribution to India business from 8% in FY21 to 31% in FY26, driven by rapid expansion across multiple high-growth categories. As reported by Motilal Oswal, this growth has been fueled by the rapid expansion of Tata Sampann, Tata Soulfull, Capital Foods, Organic India and RTD beverages. In contrast, the tea business's contribution has declined significantly from 38%/63% in FY21 to 24%/39% of consolidated/India business in FY26, highlighting the company's successful diversification beyond its traditional tea-led business. The brokerage notes that "The company continues to expand its growth portfolio with launches across segments. The growth portfolio is emerging as the next key growth driver, gradually reducing the company's dependence on its core tea business while reshaping the product mix and tapping into new and large market opportunities."
Tata Consumer Products reported strong Q1FY27 results with ~27% YoY EBIT growth, led by robust 36% YoY EBIT growth in the Indian branded business, followed by ~13% YoY growth in the International business. The company's consolidated revenues grew by 18% YoY to ₹5,434 crore in Q4FY26, with India business volume growth standing at 16%. India Foods, International business and non-branded business registered strong growth of 21%, 21% and 43% respectively during the quarter. The brokerage expects tea production to remain flat in FY27 despite flood-related disruptions in Assam and West Bengal, alongside the adverse impact of El Niño on tea-growing conditions. With moderation in tea prices from its peak and strategic price hikes in the tea business, MOFSL expects Tata Consumer's standalone gross margins to remain resilient in FY27.
The company is expected to sustain its growth momentum, aided by mid-to-long-term triggers such as 1) strengthening and accelerating its growth business, 2) expanding its product portfolio and innovation, 3) enhancing its focus on premiumisation and health and wellness products, and 4) higher innovation-to-sales ratio. The growth portfolio is expected to emerge as the next key growth driver, gradually reducing the company's dependence on its core tea business while reshaping the product mix and tapping into new and large market opportunities. As reported by analysts, the company is well positioned to deliver sustainable earnings compounding over the next 3-5 years, supported by increasing contribution of high-growth businesses and continued premiumization of its portfolio.
Motilal Oswal expects TATACONS to achieve a CAGR of 10%/15%/20% in revenue/EBITDA/PAT during FY26-28. The brokerage has reiterated its 'Buy' rating with an SoTP-based target price of ₹1,230, indicating confidence in the company's ability to navigate current market challenges while capitalizing on growth opportunities in its diversified product portfolio and expanding growth business segments. With the company's transformation from a largely tea- and salt-led company into a diversified, innovation-led F&B platform spanning beverages, foods, health & wellness, convenience and emerging consumer categories, analysts believe Tata Consumer Products is well positioned for sustained growth in the coming years.
