TATACONSUM - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.3
| Stock Code | TATACONSUM | Market Cap | 1,07,593 Cr. | Current Price | 1,087 ₹ | High / Low | 1,221 ₹ |
| Stock P/E | 70.7 | Book Value | 174 ₹ | Dividend Yield | 0.76 % | ROCE | 10.0 % |
| ROE | 7.84 % | Face Value | 1.00 ₹ | DMA 50 | 1,163 ₹ | DMA 200 | 1,126 ₹ |
| Chg in FII Hold | -0.88 % | Chg in DII Hold | 1.26 % | PAT Qtr | 307 Cr. | PAT Prev Qtr | 285 Cr. |
| RSI | 36.1 | MACD | -14.9 | Volume | 12,05,263 | Avg Vol 1Wk | 30,88,529 |
| Low price | 930 ₹ | High price | 1,221 ₹ | PEG Ratio | 7.14 | Debt to equity | 0.05 |
| 52w Index | 54.1 % | Qtr Profit Var | -46.1 % | EPS | 16.1 ₹ | Industry PE | 13.6 |
💰 Financials: Tata Consumer Products (TATACONSUM) shows moderate fundamentals with ROE at 7.84% and ROCE at 10.0%, reflecting average efficiency in capital usage. Debt-to-equity ratio of 0.05 highlights a conservative balance sheet with minimal leverage. Quarterly PAT improved to ₹307 Cr. from ₹285 Cr., but year-on-year profit variation (-46.1%) indicates earnings pressure. Cash flows remain stable, supported by diversified FMCG operations across beverages, packaged foods, and staples.
📊 Valuation: Current P/E of 70.7 is significantly above the industry average of 13.6, suggesting severe overvaluation. P/B ratio (~6.2) is high relative to book value of ₹174. PEG ratio of 7.14 signals stretched valuation compared to growth prospects. Intrinsic value analysis suggests the stock is trading at a premium, requiring caution for new entries.
🥤 Business Model & Competitive Advantage: Tata Consumer Products operates in FMCG with strong brands like Tata Tea, Tata Salt, and Tata Coffee. Its competitive advantage lies in brand trust, diversified portfolio, and distribution reach. However, profitability is constrained by high input costs and intense competition from peers in the FMCG sector.
📈 Entry Zone: Considering DMA 50 (₹1,163) and DMA 200 (₹1,126), accumulation is attractive only if the price dips below ₹950–₹1,000. Long-term investors should hold cautiously, as valuations are stretched despite strong brand positioning.
Positive
- Low debt-to-equity ratio (0.05) ensures financial stability.
- Strong brand portfolio including Tata Tea, Salt, and Coffee.
- Increase in DII holdings (+1.26%) signals domestic institutional confidence.
- Stable cash flows supported by diversified FMCG operations.
Limitation
- Weak ROE (7.84%) and ROCE (10.0%) reflect average efficiency.
- High P/E (70.7) compared to industry average (13.6).
- P/B ratio (~6.2) suggests expensive valuation.
- PEG ratio of 7.14 signals stretched valuation relative to growth.
Company Negative News
- Decline in FII holdings (-0.88%).
- Year-on-year profit variation (-46.1%) highlights earnings pressure.
Company Positive News
- Increase in DII holdings (+1.26%).
- Sequential PAT growth from ₹285 Cr. to ₹307 Cr.
Industry
- FMCG industry P/E at 13.6 indicates Tata Consumer trades at a massive premium.
- Sector growth driven by rising consumer demand and brand loyalty.
- High competition and input cost volatility remain key risks.
Conclusion
🔑 Tata Consumer Products is a stable FMCG company with strong brand equity and low debt. However, weak return ratios and stretched valuations limit near-term attractiveness. Entry around ₹950–₹1,000 offers a better risk-reward balance. Long-term holding is justified only if profitability improves and valuations normalize.