KR Choksey's research report on Tata Consumer Products
For Q2FY23, TATACONS reported revenue of INR 33,631 mn (+10.9% YoY/ +1.1% QoQ). For H1FY23, the revenue was INR 66,899 mn (+10.7% YoY). EBITDA for the quarter was INR 4,338 mn (+5.0% YoY/ -5.1% QoQ). EBITDA margin for Q2FY23 contracted by 73 bps YoY/ 85 bps QoQ to 12.9%. EBITDA margin for H1FY23 contracted by 13 bps YoY to 13.3%. Net Profit was INR 3,280 mn (+22.4% YoY/ +28.4% QoQ). Q2FY23 had a net exceptional gain of INR 1,112 mn, which included profit on the sale of land and partially set off by some costs related to business restructuring. Excluding the exceptional item, Adjusted PAT for Q2FY23 declined by 23.8% YoY/ 22.4% QoQ to INR 2,167 mn. Adj. PAT for H1FY23 was at INR 4,962 mn (+4.8% YoY).
Outlook
We have valued TATACONS on a SOTP basis. For India Business, we apply an EV/EBITDA multiple of 39.5x to FY24E EBITDA; for International Business, we apply an EV/EBITDA multiple of 16.3x to FY24E EBITDA; and for Starbucks business, we apply an EV/Revenue multiple of 2.7x to FY24E Revenue. Accordingly, we maintain our target price of INR 964 per share (unchanged), an upside of 25.7% over the CMP. Accordingly, we reiterate a “BUY” rating on the shares of Tata Consumer Products Ltd.
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