Shares of Tata Consumer Products Ltd. dropped by as much as 9% on Monday, making it the top loser on the Nifty 50 index. At 09:58 AM, Tata Consumer’s stock was down 9.17% at Rs 993 per share, while the Nifty50 index was 0.4% lower at 24,753.90.
This decline follows the company’s September quarter results, which posted a modest increase in profit and weak margin growth for Q2FY25.
The company reported a 1% year-on-year (Y-o-Y) increase in net profit, reaching Rs 367 crore for the second quarter of FY25. Its earnings before interest, tax, depreciation, and amortization (EBITDA) stood at Rs 629 crore, with EBITDA margins contracting 30 basis points to 14.9%.
This marks Tata Consumer’s largest drop in stock price since February 2022.
Following a subdued performance in the July-September earnings, analysts have lowered their target prices for the company. ICICI Securities downgraded the stock to “Add” from “Buy” and revised its price target down to Rs 1,225 from Rs 1,385.
According to a report by CNBC-TV18 report, among the 29 analysts covering Tata Consumer Products, 22 maintain a “buy” rating, six have a “hold” recommendation, and nine suggest a “sell” rating.
Goldman Sachs maintained a “neutral” stance, reducing its price target to Rs 1,050 and cutting its earnings per share (EPS) estimates by 10% to 14%.
Despite sluggish profit and margin performance, revenue grew 13% Y-o-Y to Rs 4,214 crore, boosted by acquisitions of Organic India and Capital Foods. Excluding these acquisitions, sales growth was 5%.
Tata Consumer, known for products such as ‘Tetley’ tea, its namesake brand of salt and ‘Organic India’ herbal supplements, has been expanding its distribution network, including in small towns and villages, to capitalize on the growing demand.
This helped its Indian food business, which sells a variety of packaged products including pulses and spices, post a 28% jump in quarterly revenue. Its international business, meanwhile, rose 7%, countering weak demand for its beverages in India.
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