Tata Consumer Products Shares Jump Over 8% to Around ₹1,073 After Goldman Sachs Upgrade

Goldman Sachs has upgraded Tata Consumer Products' stock rating from 'neutral' to 'buy'. This led to a significant surge of over 8% and increased the target price to ₹1,200 from ₹1,040. This upgrade, announced on Wednesday, April 2, 20254 , led to a significant surge in Tata Consumer Products' share price.

Reasons for Bullish Outlook

Goldman Sachs cited several key factors for its positive outlook on Tata Consumer Products. These include the potential for strong earnings growth between FY25 and FY27, driven by an expected recovery in tea margins due to price hikes. The brokerage also highlighted the company's ongoing innovation and expansion of its distribution network in its growth businesses. Furthermore, the anticipated reduction in net interest costs as the company pays down its acquisition-related debt is expected to improve its financial position. While acknowledging competition in the FMCG sector, Goldman Sachs believes that the worst is over for Tata Consumer Products, and its ability to manage cost pressures and maintain margin resilience strengthens its investment case

Price Action and Impact on Market

Shares of Tata Consumer Products surged over 8% after this upgrade. The stock climbed to an intraday high of ₹1,073.15 on the National Stock Exchange (NSE) and ₹1,073.55 on the Bombay Stock Exchange (BSE). Its market capitalisation on the BSE also rose to ₹1.05 lakh crore. The upside from the last closing price of ₹991.90 was pegged at 21%.

Recent Financial Performance

Tata Consumer Products reported a net profit of ₹279 crore in its third-quarter earnings announcement for FY25, flat with the same period last year. Revenue from operations, on the other hand, surged 17% YoY to ₹4,444 crore. Consolidated EBITDA of the company was ₹578 crore, no growth over last year on account of very high inflation in Indian tea cost impacting profitability even with higher revenues. Another report added that EBITDA declined 1.4% on-year to ₹564 crore with an EBITDA margin of 12.7%, impacted by higher expenses.

Stock Performance and Technical Indicators

While the stock remains approximately 14% below its 52-week high of ₹1,247.75 recorded in July 2024, it has gained over 21% from its 52-week low of ₹884 in December 2024. Over the past year, the stock had declined by 7.5%, but it has shown recent positive momentum with a 12% rally in January and a 4% gain in March, following a 6% drop in February. Technically, the stock's Relative Strength Index (RSI) is at 57.4, which is neither oversold nor overbought. The Moving Average Convergence Divergence (MACD) is at -6.3, below its centre line, indicating a bearish signal. However, the stock is currently trading above its short-term (5-day to 100-day) Simple Moving Averages (SMAs) but below its longer-term (150-day and 200-day) SMAs. On Tuesday preceding the upgrade, the stock closed at ₹991.9 on the BSE, down by 1%, while the Sensex declined by 1.8%. The stock has surged 41% in the past two years but dropped 17% in the last six months

Company Business

Its branded business is engaged in the trading, production and distribution of a range of consumer products. This includes tea, coffee, water, salt, pulses, spices, snacks and ready-to-eat packaged food products

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