Tata Consumer is now the third most valued Tata company — and analysts expect more premium ahead

• The 72% rally Tata Consumer share price since March 31 has raised the company’s total market capitalisation to a record high of ₹506 billion as of September 7.
• The company is trying to strengthen its feet in the pulses and spices category with its brand ‘Tata Sampan’.
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When you think of the most valued Tata Group companies, Tata Consumer may not be the first company to click in your mind. Shareholders of Tata Consumer would not be complaining now though. The 72% rally in its share price since March 31 has raised the company’s total market capitalisation to a record high of ₹503 billion as of September 7.

After Tata Consultancy Services (TCS) and Titan, Tata Consumer now ranks third amongst most valued listed Tata companies. Tata Consumer has surpassed the market capitalisation of most of Tata’s other listed subsidiaries.

Tata Subsidiaries	Market Capitalisation
TCS	₹8.72 trillion
Titan	₹1.03 trillion
Tata Consumer	₹501.46 billion
Tata Motors	₹493.61 billion
Tata Steel	₹ 479.84 billion

*Source: BSE, market cap as of September 7

Tata Consumers owns a large market share in the kitchen segment — from Tata Salt to Tata Tea and spices to pulses— Tata products have become a popular household name in India over the years.

And this three-month long lockdown turned engineers, pilots, doctors and many more professionals into chefs and there has been a surge in sales of essential agri items - leading to the gains in the past five months.


How Tata Consumer is adjusting to the post pandemic reality


The company is trying to strengthen its feet in the pulses and spices category with its brand ‘Tata Sampan’. This segment has a higher share of unbranded and unorganised players in India. And, analysts at Sharekhan believe that the rising fear of infectious diseases like coronavirus will push people to packaged and branded food, and that may be good for Tata Consumer.


Tata Consumer - Factors that can lead to further rally

Increase in use of value-added products

In the post-COVID world, people will step out less to eat in restaurants, and the rise in home cooking will open a new market for value-added intermediary products.

Home chefs will opt for comfort and quick preparations helping the demand for purees for curry, ginger garlic paste, and regional masalas.This trend is likely to emerge more strongly in the metros, according to Sharekhan, in the near to medium term. Tata Consumer is already geared to tap this demand with its ad campaign with the tagline, ‘Restaurant jaisa khaana’ (Restaurant-like food).

Speciality tea gaining good traction than regular tea

While regular black tea continues to be the largest category in the overall global tea market, the segment is now witnessing a slow decline in the both Indian and domestic market.

Top Indian metro cities such as Mumbai and Bengaluru are mirroring the global trend where green tea or other herbal variants are replacing the traditional black tea. Tata Consumer has the whole spread under brands like Tetley.

So while Mukesh-Ambani led Reliance Industries is building its digital and retail empire with acquisition of many established firms like Future Retail and Netmeds, Tata is focussing on building its product base. As of June 2020, Tata Consumers reach in India stood at 110 million households, whereas TCL’s consumer business’ India reach stood at 140 million households.

According to Bloomberg, 12 out of 13 analysts covering Tata Consumer have a ‘buy’ rating on the stock.

Tata Consumer: Consensus Rating

Rating	Consensus	Brokerages
Buy	92.3%	12
Hold	7.7%	1
Sell	-	-

Source: Bloomberg

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