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India's Tata Consumer rises as brokerages cheer growth in newer businesses

By Reuters News

Oct 27 (Reuters) - Shares of India's Tata Consumer Products TACN.NS rose as much as 5.5% on Tuesday after two brokerages upgraded the stock following better-than-expected quarterly results, citing strong growth in newer businesses and prospects for a margin recovery.

Shares of the company touched 986.10 rupees, as of 9:32 a.m. IST, after closing down 2.84% in the previous session.

Systematix upgraded the stock to "buy", citing strong volume-led growth and a shift towards higher-margin packaged foods and beverages that would reduce dependence on its traditional tea business.

BOB Capital Markets also upgraded Tata Consumer to "buy" from "hold", saying it expects growth in newer businesses and price increases to support earnings.

Tata Consumer reported a 16% rise in second-quarter profit to 4.69 billion rupees ($49.27 million) on Monday, beating analysts' estimate of 4.66 billion rupees, according to LSEG-compiled data.

Revenue rose 14% to 56.61 billion rupees, supported by growth in packaged foods, beverages and salt, while tea volumes remained flat.

The company's growth businesses recorded a 40% rise in revenue during the quarter, accounting for 38% of its India business.

Jefferies retained its "buy" rating, saying Tata Consumer was well placed to benefit from the rapid expansion of quick commerce, particularly through its packaged foods and beverages portfolio.

It expects newer businesses to account for about half of the company's India sales within three years, compared with 38% currently.

Citi also maintained its "buy" recommendation, forecasting a margin improvement of about 50 basis points in the second half of fiscal 2027 as price hikes in tea and salt take effect.

Tata Consumer has raised tea prices by 8%-10% since the start of the financial year and increased salt prices by about 6% in early October, with the benefits expected to flow through from the December quarter.

($1 = 95.1850 Indian rupees)

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