CLSA Initiates Coverage on Tata Consumer with Underperform Rating

 

- CLSA initiated coverage on Tata Consumer with an underperform rating and a target price of 1288 rupees.

- The analysis suggests limited upside potential due to the company being priced to perfection.

- Tata Consumer is noted for its presence in high-growth categories like spices, pulses, and snacks.

- The company is expected to report a compounded 15% sales growth, including recent acquisitions like Capital Foods and Organic India.

- Excluding these acquisitions, revenue growth is projected to be over 11% over the next three years.

- However, Tata Consumer's valuation is high, trading at 50 times F5 26 price-to-earnings, a premium compared to consumer staples' average of around 45 times.

- The potential for faster industry growth or higher-than-expected return on equity (ROE) could be upside risks for the stock.

- Tata Consumer's stock was down around 3.5% at the time of the report.

- The company's performance will be closely monitored for signs of faster growth or improved ROE.

- Overall, CLSA sees limited upside for Tata Consumer at current levels.