Tata Consumer shares: Nuvama sees further upside potential; retains 'BUY' rating

Tata Consumer Products Ltd posted a robust performance in the financial year 2025, Nuvama Institutional Equities stated. The brokerage highlighted a sharp rise in the contribution of growth businesses, which accounted for 28 per cent of the company's overall portfolio -- up from 18 per cent in FY24.

Notably, Tata Consumer's revenue from growth segments reached Rs 3,200 crore, marking a 76 per cent increase. Within these segments, Soulfull and Sampann emerged as frontrunners, with growths of 32 per cent and 29 per cent, respectively. Capital Foods also performed well in its inaugural year of consolidation, posting a like-for-like growth of 23 per cent.

The performance of non-branded businesses was impressive, expanding by 21 per cent, bolstered by the Plantations business which soared by 47 per cent. This growth was supported by higher realisations and volume increments, while the Solubles business advanced by 12 per cent, driven by both coffee and tea.

Nuvama noted, "For FY25, net working capital for the India business turned negative. The cash conversion cycle (CCC) improved to 21 days in FY25 from 29 days in FY24." This improvement was despite a reduction in consolidated RoE and RoCE.

Core areas like salt and tea saw mixed results. Salt revenues rose by 8 per cent, contributing to a 15 per cent CAGR over four years, while tea experienced modest revenue growth at 3 per cent with volume increasing by 1 per cent. Coffee, however, exhibited a robust 33 per cent revenue increase, with Tata Coffee crossing Rs 100 crore in gross revenue.

Tata Consumer's international operations also recorded positive results with revenues increasing by 5 per cent in constant currency (CC) terms. While UK tea volumes remained flat, the company became the second-largest brand in the UK with a 16.5 per cent share. Tata Consumer maintained its leading position in Canada, showcasing its strong international presence.

Nuvama further stated, "Tata Soulfull's reach extended to 0.6 million outlets, which is ~2x versus a year ago. Tata Copper Plus revenue expanded 18 per cent while Himalayan grew 10 per cent during FY25."

The company’s outlook remains positive, with Nuvama maintaining a 'BUY' rating on Tata Consumer and setting a target price of Rs 1,335. The stock closed 0.63 per cent lower at Rs 1,064.10 on Wednesday, indicating an upside potential of 25.46 per cent from current levels.

Nuvama also underscored the firm's potential to sustain its momentum and further strengthen its performance in the coming years.