8 May 2021
4QFY21 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: INR629
TP: INR725 (+15%)
Buy
TATACONS IN
922
Scale-up of Tata Sampann remains critical
579.7 / 7.9
698 / 326
Higher tea prices impacted standalone gross margins by 10.1pp YoY to
-5/7/27
30.9%, and higher A&P consequently impacted the consolidated EBITDA
2504
margin by 290bps YoY to 9.9%. Consolidated EBITDA de-grew 3% YoY on the
65.3
High tea prices dent EBITDA margin; performance
below expectation
Financials & valuations (INR b)
Y/E Mar
2021
2022E
Sales
116.0
122.5
EBITDA
15.4
18.5
PAT
8.7
11.2
EBITDA (%)
13.3
15.1
EPS (INR)
9.5
12.2
EPS Gr. (%)
20.8
28.5
BV/Sh. (INR)
158
165
Ratios
Net D/E
(0.2)
(0.2)
RoE (%)
6.1
7.5
RoCE (%)
8.3
10.2
Payout (%)
43.6
37.0
Valuations
P/E (x)
66.5
51.8
EV/EBITDA (x)
35.8
29.9
Div Yield (%)
1.9
2.1
FCF Yield (%)
7.5
5.7
2023E
138.4
22.5
14.0
16.3
15.2
25.4
176
(0.3)
8.9
12.1
30.5
41.3
24.5
2.4
6.6
back of 13% EBITDA de-growth in standalone. The Tata Sampann portfolio
grew 2% during the quarter, impacted by volatility in the Pulses market;
portfolio grew 26% during FY21. The scale-up of the Sampann portfolio
remains a key monitorable.
We lower our earnings estimates for FY22 by 7% on the back of near-term
margin pressure in Tea. We maintain our earnings estimates for FY23 and
arrive at an FY23 SOTP-based TP of INR725/share. Maintain
Buy.
Tata Consumer Products (TCP) reported consolidated revenue growth of
26% YoY to INR30.4b (est. INR28.6b). The EBITDA margin contracted 290bp
YoY to 9.9% (est. 11.9%) on a 620bp gross margin contraction to 39.2%.
EBITDA de-grew 3% YoY to INR3,002m (est. INR3,397m). Adj. PAT was down
36% YoY to INR1.1b (est. INR1.9b), largely due to higher tax rate and MI.
India Branded Beverages/Foods revenue was up 60%/22% YoY to
INR12b/INR6.4b. India Beverages EBIT de-grew 40% YoY to INR524m, while
India Foods EBIT grew 52% YoY to INR868m. International Branded
Beverages revenue remained flat YoY to INR8.8b, with EBIT de-growth of
14% YoY to INR1,101m.
India Branded Beverages/Foods volumes grew 23%/21% YoY, benefitting
from a low base effect and expansion in the distribution reach. Salt revenue
grew 26% during the quarter. The Tata Sampann portfolio was up 2% in 4Q,
impacted by volatility in the Pulses market.
Standalone revenue grew 39% YoY to INR18.5b and EBITDA was down 11%
YoY to INR1.4b. The gross margin contracted 1,010bp YoY (+80bp QoQ) to
30.9% on the back of higher tea prices.
Tata Coffee consol:
Revenue grew 14% YoY to INR5.9b, with EBITDA growth
of 22% YoY to INR944m.
Tata Coffee standl:
Revenue grew 30% to
INR2,177m and EBITDA was INR241m v/s INR7m last year.
Tata Coffee
Overseas
(Tata Coffee consol less Tata Coffee standl): Revenue grew 7% YoY
to INR3,736m, with EBITDA de-growth of 8% YoY to INR703m.
TCP Overseas Tea:
Revenue grew 8% to INR6b, with EBITDA declining 10%
YoY to INR637m.
In FY21, consolidated revenue/EBITDA/adj. PAT grew 20%/19%/21%. In
FY21, TCP generated CFO of INR16.6b, up 53% YoY, on the back of lower
trade receivables and higher payables; this was offset by higher inventory.
Higher distribution reach drives volume growth in India biz.
Shareholding pattern (%)
Promoter
DII
FII
Others
Mar-21 Dec-20 Mar-20
34.7
34.7
34.7
12.6
13.6
21.8
25.3
25.8
17.1
27.5
26.0
26.4
Note: FII includes depository receipts
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.