TATACONSUM - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.5

📊 Core Financials Overview

Profitability

ROE: 7.84% and ROCE: 10.0% are modest, indicating average capital efficiency.

EPS of ₹18.0 and PAT of ₹714 Cr (up from ₹215 Cr) show strong quarterly performance, with a 273% profit variation, likely driven by one-time gains or seasonal strength.

Operating margins remain stable, but not industry-leading.

Balance Sheet Health

Debt-to-equity ratio: 0.03 — virtually debt-free, a major strength.

Book Value of ₹172 vs Current Price ₹1,129 → P/B ratio ~6.57, which is high for a consumer staples company.

Dividend Yield of 0.73% — modest, but consistent with a reinvestment-focused strategy.

Cash Flow & Stability

PEG ratio of 6.49 suggests significant overvaluation relative to earnings growth.

RSI at 63.1 and MACD positive indicate bullish momentum, though nearing overbought territory.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 64.3 Overvalued vs industry PE of 19.2

P/B Ratio ~6.57 Premium pricing

PEG Ratio 6.49 Indicates stretched valuation

Intrinsic Value ~₹950–₹980 Estimated below current price

Tata Consumer Products appears overvalued, especially given its modest return metrics and elevated PEG ratio

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🏪 Business Model & Competitive Edge

Sector: Tata Consumer Products Ltd operates in food and beverages, with brands like Tata Tea, Tetley, Tata Salt, and Tata Sampann.

Strengths

Strong brand equity and distribution across India and global markets

Virtually debt-free with healthy interest coverage and cash conversion cycle

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Strategic integration of Tata Coffee and expansion into health and wellness categories

Challenges

High valuation multiples not backed by consistent margin expansion

ROE/ROCE below top-tier FMCG peers

Analysts note earnings often miss estimates and valuation is high relative to tangible assets

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Despite its brand strength and clean balance sheet, Tata Consumer’s valuation and return metrics warrant caution.

📌 Entry Zone Recommendation

Suggested Entry Range: ₹950–₹980

Below 50 DMA (₹1,087) and closer to intrinsic value

RSI suggests waiting for a pullback before entry

🧭 Long-Term Holding Guidance

Hold if Already Invested: Strong brand portfolio and debt-free status support long-term stability.

Accumulate on Dips: Especially near ₹950 for better margin of safety.

Watchlist Triggers

EPS consistency and margin expansion

Institutional accumulation

Strategic product launches and rural penetration

Tata Consumer is a quality FMCG play with strong fundamentals, but its current valuation calls for patience. You can explore deeper insights on TopStockResearch’s dashboard and Ticker’s financial summary for more details.

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ticker.finology.in

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www.marketscreener.com

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