Tata Consumer Share Price 5% Drop Post-Q4 Results: Buy or Sell?

After three consecutive sessions of gains, shares of the FMCG major fell by almost 5% on the BSE in Wednesday’s trade after declaring its Q4 result on Tuesday. The share price opened at ₹1,112.90 against its previous close of ₹1,173.25 and fell 5.30% to the level of ₹1,111.05 on Tuesday, April 23.

Tata Consumer Products’ Q4 result was announced on Tuesday and today, its stock has been impacted severely. Tata Consumer’s Q4 announcement indicated a 22.5% drop in its Q4FY24 net profit at ₹267.7 crore, in the corresponding period last year it was ₹345.6 crore. Tata Consumer revenue from operations in Q4 increased 8.5% to ₹3,927 crore and in the previous year, it was at ₹3,619 crore. Tata Consumer board has declared a final dividend of 775% for FY24 in its regulatory filing.

Around 10:15 am, on Wednesday, April 24, Tata Consumer’s share price traded 4.88% lower at ₹1,116 apiece. Equity benchmark Sensex was up 0.39% at 74,024.86 at that time. However, Goldman Sachs has maintained a neutral rating on the stock with a target price of ₹1,030.

So, should you buy, sell or wait? First things first. Although there was a blip in quarterly numbers, investors should remember that Tata Consumer’s stock has been outperforming the equity benchmarks in the last one year by a significant margin. Its share price has shot up nearly 68%. To put things in perspective, the BSE Sensex has gained nearly 24%.

Brokerage firms are, however, positive on the stock’s performance even after the announcement of the Q4 results. For instance, ICICI Securities said the company’s Q4FY24 was in line with its estimates and kept a ‘Buy’ rating on the stock.
Its target price is ₹1,360 - an upside of 16%, LiveMint reported.

"We reckon the stock trigger in FY25-26 is likely outperformance of growth businesses, which are gross margin accretive too. Post-acquisition of Capital Foods and Organic India, the salience of growth businesses is nearly 30% of India branded sales," ICICI Securities said. "We believe Tata Consumer has all the ingredients (resources, bandwidth, innovation pipeline, etc.) to achieve these targets," ICICI Securities added.

Nuvama Wealth Management too has kept its ‘Buy’ call on Tata Consumer stocks. Their target price is ₹1,400. Their reasoning being that Tata Consumer’s Q4 EBITDA and adjusted Profit After Tax (PAT) were ahead of its estimates. Also, that the company’s revenue was in-line with Nuvama’s estimates.

“Tata Consumer continues to drive growth via innovation, distribution expansion and foray into new segments,” Nuvama observed. The brokerage firm said it would revisit its estimates and target price for the stock after the earnings call.