Synopsis: Tata Consumer's stock price experienced a significant decline of 5% following the release of its Q4 financial results. This prompts investors to consider whether to buy or sell the stock amidst the fluctuating market conditions.
Tata Consumer's stock price has shown significant outperformance compared to the equity benchmark over the past year. With an impressive surge of nearly 68%, it has outpaced the equity benchmark Sensex, which saw a gain of approximately 24% during the same period.
Following three consecutive sessions of gains, Tata Consumer Products witnessed a decline of over 5% in morning trade on the BSE, a day after the company released its earnings report for the March quarter. Opening at INR1,112.90 against the previous close of INR1,173.25, the stock fell by 5.30% to reach INR1,111.05. Around 10:15 am, Tata Consumer's shares were trading 4.88% lower at INR1,116 apiece. Meanwhile, the equity benchmark Sensex recorded a 0.39% increase at 74,024.86 during the same period.
Post-market hours on Tuesday, April 23, Tata Consumer reported a 22.5% decrease in its net profit for Q4FY24, amounting to INR267.7 crore compared to INR345.6 crore in the corresponding period last year. However, revenue from operations in the quarter witnessed an 8.5% increase, reaching INR3,927 crore compared to INR3,619 crore in the previous year's period. Additionally, the company's EBITDA for the March quarter grew by 23% to INR629.6 crore, up from INR511.7 crore in the same period last year. The board of Tata Consumer Products also declared a final dividend of 775% for FY24.
Despite the earnings report, several brokerage firms maintained their positive outlook on the stock. ICICI Securities reiterated a buy rating on the stock with a target price of INR1,360, implying a 16% upside. The brokerage firm stated that Tata Consumer's Q4FY24 performance was in line with its expectations and highlighted the potential for growth in the coming years, particularly with the expansion of its growth businesses. Similarly, Nuvama Wealth Management upheld its buy recommendation on the stock with a target price of INR1,400, citing the company's Q4 EBITDA and adjusted PAT exceeding its estimates. Nuvama emphasized Tata Consumer's continuous focus on driving growth through innovation, distribution expansion, and diversification into new segments, indicating a positive outlook for the stock.
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