Tata Consumer Products shares jump over 8% as Goldman Sachs upgrades stock to 'buy'

Shares of Tata Consumer Products surged over 8 per cent on Wednesday, April 2, after Goldman Sachs upgraded the stock rating to ‘Buy’. The global brokerage also raised its target price to ₹1,200 from ₹1,040, implying a potential upside of 21 per cent from the previous closing price of ₹991.90 per share.

Goldman Sachs cited strong earnings growth potential for Tata Consumer Products over FY25-27, driven by a recovery in tea margins aided by price hikes. The brokerage also highlighted the company’s ongoing innovation and distribution expansion in its growth businesses as key factors supporting its bullish outlook.

One of the major catalysts for Goldman Sachs' optimism is the expected reduction in net interest costs as Tata Consumer pays down its acquisition-related debt. This, the brokerage noted, will improve the company’s financial position.

While competition in the FMCG sector remains a concern, Goldman Sachs believes that the worst is behind for Tata Consumer Products. The company's ability to navigate cost pressures and maintain margin resilience further strengthens its investment case, according to the report.

Tata Consumer Products Q3 Performance

In its third-quarter earnings report for FY25, Tata Consumer Products posted a flat net profit of ₹279 crore, unchanged from the same period last year. However, revenue from operations grew by 17 per cent year-on-year to ₹4,444 crore.

The company’s consolidated EBITDA stood at ₹578 crore, reflecting no growth compared to the previous year. This stagnation was attributed to significant inflation in Indian tea costs, which impacted profitability despite higher revenues.

Stock Performance and Market Trend

Following the upgrade, Tata Consumer Products stock climbed as much as 8.2 percent to an intra-day high of ₹1,073.55. It remains 14 per cent away from its 52-week high of ₹1,247.75, recorded in July 2024, but has gained over 21 per cent from its 52-week low of ₹884, hit in December 2024.

Over the past year, the Tata Group stock has declined by 7.5 per cent. However, it has shown resilience in recent months. After a 6 per cent drop in February, the stock gained 4 per cent in March and recorded a strong 12 per cent rally in January, highlighting renewed investor interest.

The latest upgrade from Goldman Sachs reinforces confidence in Tata Consumer Products' long-term growth prospects. With a focus on margin recovery, product innovation, and distribution expansion, the company appears well-positioned to navigate competitive pressures.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.