Tata Consumer share price falls 5% after Q4 result; should you buy or sell the stock?

Tata Consumer share price: After three consecutive sessions of gains, shares of Tata Consumer Products cracked over 5 per cent in morning trade on BSE on Wednesday, April 24, a day after the company reported its March quarter earnings. Tata Consumer share price opened at ₹1,112.90 against its previous close of ₹1,173.25 and fell 5.30 per cent to the level of ₹1,111.05. Around 10:15 am, Tata Consumer share price traded 4.88 per cent lower at ₹1,116 apiece. Equity benchmark Sensex was 0.39 per cent up at 74,024.86 at that time.

After market hours on Tuesday, April 23, Tata Consumer reported a 22.5 per cent drop in its Q4FY24 net profit at ₹267.7 crore, compared to ₹345.6 crore in the corresponding period last year. Revenue from operations in the quarter rose 8.5 per cent to ₹3,927 crore, compared to ₹3,619 crore in the year-ago period.

The company's (earnings before interest, taxes, depreciation, and amortization) EBITDA for the March quarter grew 23 per cent to ₹629.6 crore, compared to ₹511.7 crore in the same period last year.

Tata Consumer Products's board also announced a final dividend of 775 per cent for FY24.

Also Read: Tata Consumer Products Q4 Results: Net profit drops 22% to ₹267 crore, revenue down 8.5% YoY; dividend declared

Should you buy or sell?

Tata Consumer share price has significantly outperformed the equity benchmark in the last one year. The stock has jumped nearly 68 per cent in the last one year (as of April 23 close) against a nearly 24 per cent gain in equity benchmark Sensex.

Several brokerage firms retained their positive views on the stock after the company's Q4 result. 

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Brokerage firm ICICI Securities maintained a buy call on the stock with a target price of ₹1,360, implying a 16 per cent upside.

The brokerage firm said Tata Consumer’s Q4FY24 was in line with its estimates.

"We reckon the stock trigger in FY25-26 is likely outperformance of growth businesses (which are gross margin accretive too). Post-acquisition of Capital Foods and Organic India, the salience of growth businesses is nearly 30 per cent of India branded sales," ICICI Securities said.

"It needs to execute the basics - derive synergies, distribution expansion, increase in through-put per store, etc. Starbucks plans to reach 1,000 outlets by FY28 (421 currently). We believe Tata Consumer has all the ingredients (resources, bandwidth, innovation pipeline, etc.) to achieve these targets," ICICI Securities said.

Brokerage firm Nuvama Wealth Management also maintained its buy call on the stock with a target price of ₹1,400, citing Tata Consumer’s Q4 EBITDA and adjusted PAT were ahead of its estimates while revenue was in-line with its estimates.

Tata Consumer continues to drive growth via innovation, distribution expansion and foray into new segments, Nuvama observed. The brokerage firm said it would revisit its estimates and target price for the stock after the earnings call. 

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