3 February 2021
3QFY21 Results Update | Sector: Consumer
Tata Consumer Products
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
CMP: INR576
TP: INR661 (+15%)
Buy
Gross margin contraction weighs on EBITDA
Adjusted PAT above our estimates
TATACONS IN
922
530.4 / 7.4
635 / 214
-8/2/29
2218
65.3
2023E
134.7
22.2
14.3
16.4
15.5
16.5
176
(0.2)
9.1
11.5
34.9
37.2
23.2
2.6
5.7
Financials & valuations (INR b)
Y/E Mar
2021E
2022E
Sales
114.3
121.9
EBITDA
15.8
19.5
PAT
9.7
12.3
EBITDA (%)
13.9
16.0
EPS (INR)
10.5
13.3
EPS Gr. (%)
32.1
26.3
BV/Sh. (INR)
157
167
Ratios
Net D/E
(0.1)
(0.2)
RoE (%)
6.9
8.2
RoCE (%)
8.4
10.4
Payout (%)
27.2
24.8
Valuations
P/E (x)
54.7
43.3
EV/EBITDA (x)
32.5
26.4
Div Yield (%)
1.4
1.6
FCF Yield (%)
3.0
5.7
Higher tea price impacted standalone gross margin by 840bp YoY to 30%.
The consolidated EBITDA margin was impacted by 100bp YoY to 11.8%.
Consolidated EBITDA grew 14% YoY on the back of 23% revenue growth.
Performance across business segments has improved (Tata Coffee
standalone and overseas operations and overseas Tea). India Food and
Beverage business showed double-digit volume growth.
Factoring in its performance in 3QFY21, we decrease our FY21E
EBITDA/adjusted PAT estimates by 6%/2%, but maintain our FY22E/FY23E
earnings estimates, and arrive at an FY23E SoTP-based TP of INR661.
Maintain
Buy.
Double-digit volume growth in India Foods/Beverages business
Shareholding pattern (%)
Promoter
DII
FII
Others
Dec-20 Sep-20 Dec-19
34.7
34.7
34.5
13.6
17.7
14.9
25.8
21.7
26.0
26.0
25.9
24.6
Note: FII includes depository receipts
Revenue was up 23% YoY to INR30.7b (v/s our estimate of INR29.9b).
EBITDA grew 14% YoY to INR3.6b (v/s our expectation of INR3.9b). EBITDA
margin contracted 100bp YoY to 11.8% due to 570bp gross margin
contraction (to 37.8%). Adjusted PAT stood at INR2.2b (v/s our estimate of
INR2b), up 31% YoY, aided by EBITDA growth and a lower tax rate. In
9MFY21, revenue/EBITDA/adjusted PAT grew 18%/26%/39%.
India Branded Beverages/Foods revenue grew 46%/19% YoY to
INR12.8b/INR6.3b. India Beverages/Foods EBIT declined/increased by
38%/41% YoY to INR793m/INR934m. International Branded Beverages
witnessed 9% revenue growth to INR9.3b, with EBIT growth of 55% YoY to
INR1,226m. India Branded Beverages/Food volumes grew 10%/12% YoY.
Standalone revenue grew 34% YoY to INR19.6b and EBITDA stood at INR2b,
down 5%. Gross margin contracted 840bp YoY to 30.1% on the back of
higher Tea prices. Adjusted PAT stood at INR1.4b, down 2% YoY.
Tata Coffee:
Consolidated revenue grew 6% YoY to INR5.3b, with 13%
EBITDA growth to INR964m.
Standalone
revenue declined 5% to INR1,578m,
with 28% YoY EBITDA growth to INR190m.
Overseas
(Tata Coffee
consolidated less standalone operations) revenue grew 12% YoY to INR3.8b,
with EBITDA growth of 10% to INR773m.
TCP Overseas Tea:
Revenue/EBITDA grew 9%/160% to INR5.7b/INR679m.
Highlights from the management commentary
Tea prices are 25-30% higher as compared to last year and is likely to cool
off once the new crop comes into the market, i.e. by Apr-May’21. Thus, Tea
prices are likely to normalize by 1QFY22.
Tata Sampann: Revenue is up 40% in 9MFY21. The portfolio grew in high
double-digits during 3QFY21, with in-home consumption normalizing.
Sumant Kumar - Research Analyst
(Sumant.Kumar@MotilalOswal.com)
Research Analyst: Darshit Shah
(Darshit.Shah@motilaloswal.com) /
Yusuf Inamdar
(yusuf.inamdar@motilaloswal.com)
hvs
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.