TATACONSUM - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.9
| Stock Code | TATACONSUM | Market Cap | 1,14,248 Cr. | Current Price | 1,153 ₹ | High / Low | 1,221 ₹ |
| Stock P/E | 75.1 | Book Value | 174 ₹ | Dividend Yield | 0.72 % | ROCE | 10.0 % |
| ROE | 7.84 % | Face Value | 1.00 ₹ | DMA 50 | 1,161 ₹ | 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 | 49.0 | MACD | -11.7 | Volume | 11,66,050 | Avg Vol 1Wk | 18,56,784 |
| Low price | 930 ₹ | High price | 1,221 ₹ | PEG Ratio | 7.58 | Debt to equity | 0.05 |
| 52w Index | 76.5 % | Qtr Profit Var | -46.1 % | EPS | 16.1 ₹ | Industry PE | 13.9 |
📊 Analysis: TATACONSUM shows moderate fundamentals but trades at expensive valuations. ROE at 7.84% and ROCE at 10.0% are below compounding benchmarks. The P/E of 75.1 is significantly higher than the industry average of 13.9, suggesting steep overvaluation. PEG ratio of 7.58 highlights growth priced at a premium. Dividend yield of 0.72% provides limited passive returns. Technicals show neutral momentum with RSI at 49.0 and MACD negative. The ideal entry zone lies between 930–1,000 ₹ for margin of safety. For existing holders, a medium-term horizon is viable, but partial profit booking near 1,200–1,220 ₹ resistance is advisable unless profitability improves.
✅ Positive
- Large market cap of 1,14,248 Cr. ensures stability and leadership in FMCG.
- Low debt-to-equity ratio (0.05) indicates strong financial discipline.
- DII holdings increased by 1.26%, showing domestic investor confidence.
- Quarterly PAT growth (307 Cr. vs 285 Cr.) shows sequential improvement.
- EPS of 16.1 ₹ provides valuation support.
⚠️ Limitation
- Low ROE (7.84%) and ROCE (10.0%) limit long-term compounding potential.
- High P/E (75.1) compared to industry average (13.9).
- PEG ratio of 7.58 highlights expensive growth valuation.
- Dividend yield of 0.72% is modest.
- FII holdings decreased by -0.88%, showing reduced foreign confidence.
📉 Company Negative News
- Quarterly profit variation at -46.1% indicates earnings pressure.
- MACD at -11.7 suggests bearish sentiment.
- Stock trading near 76.5% of 52-week index range, limiting upside potential.
📈 Company Positive News
- Sequential PAT growth shows operational resilience.
- Domestic institutional investors increasing stake.
- Strong brand presence in FMCG sector supports long-term demand.
🏭 Industry
- FMCG sector benefits from steady demand and consumption growth.
- Industry P/E at 13.9 suggests TATACONSUM trades at a steep premium.
- Structural drivers: packaged foods, beverages, and rising consumer spending.
🔎 Conclusion
TATACONSUM earns a rating of 2.9 due to weak ROE/ROCE and expensive valuations despite strong brand presence and modest dividend yield. Long-term investors should only consider entry in the 930–1,000 ₹ zone for margin of safety. Current holders may adopt a medium-term horizon, with partial profit booking near 1,200–1,220 ₹ resistance unless profitability improves. The stock remains a consumption-driven play but is not a strong long-term compounding candidate at current valuations.