Tata Consumer Products Surges 8% After Goldman Sachs Upgrade

Goldman Sachs Boosts Rating and Target Price

Tata Consumer Products saw a significant 8% jump in its share price on Wednesday after Goldman Sachs upgraded its rating from ‘Neutral’ to ‘BUY’ and raised its price target to ₹1,200 per share. The stock surged to an intraday high of ₹1,073.15 on the National Stock Exchange (NSE) before settling at ₹1,063.40, up 7.17%.

Goldman Sachs’ decision to revise its outlook was based on strong projected earnings growth and expectations of a recovery in tea margins over the next three financial years. The global brokerage firm highlighted Tata Consumer’s aggressive innovation strategy and expanded distribution as key factors supporting its positive stance on the stock.

Highlights:

• Goldman Sachs upgraded Tata Consumer to ‘BUY’ from ‘Neutral’.

• Price target revised to ₹1,200 from the earlier ₹1,040.

• Shares jumped 8% in early trade before settling at ₹1,063.40.

Earnings Growth Outlook for FY25–27

Goldman Sachs anticipates robust Earnings Per Share (EPS) growth for Tata Consumer Products from FY25 to FY27. The brokerage firm expects the company’s focus on premiumization, cost efficiency, and margin improvement to drive profitability.

Tata Consumer’s tea segment has been under margin pressure due to rising raw material costs, but the company has initiated price hikes to offset inflationary pressures. Goldman Sachs believes these efforts will stabilize the segment and restore profitability, adding another catalyst for stock growth.

Additionally, the firm sees Tata Consumer’s expansion in value-added products and premium offerings as a crucial long-term driver. The company has been aggressively scaling up its branded packaged foods and beverages segment, contributing significantly to overall revenue.

Highlights:

• Earnings Per Share (EPS) expected to grow strongly from FY25–27.

• Tea margin recovery projected, supported by price increases.

• Expansion in premium and value-added products seen as a growth driver.

Revenue Growth and Profit Challenges

Despite the bullish outlook, Tata Consumer Products recently reported a 6% decline in group profit to ₹282 crore, impacted by inflation in tea costs and high interest expenses. Sequentially, the net profit also saw a sharp 23% drop from the previous quarter’s ₹367.2 crore.

However, on the top-line front, the company posted a 17% year-on-year increase in revenue to ₹4,444 crore for the quarter ended December 31. The India beverages and foods segment, which contributes nearly 70% of total revenue, played a crucial role in this growth.

While short-term profitability concerns remain, analysts believe that strong revenue momentum, strategic price hikes, and cost optimizations will help stabilize margins over the coming quarters.

Highlights:

• Group profit declined 6% due to inflation and higher interest costs.

• Sequential net profit dropped 23% from the previous quarter.

• Revenue surged 17% YoY to ₹4,444 crore, driven by India’s beverages and foods segment.

Market Sentiment and Future Prospects

The market response to Goldman Sachs’ upgrade reflects a renewed optimism in Tata Consumer Products. With India’s growing demand for premium packaged foods and beverages, the company is well-positioned to capitalize on changing consumer trends.

Tata Consumer has also been expanding its product portfolio, strengthening its presence in ready-to-drink beverages, breakfast cereals, and plant-based nutrition—all segments with high-growth potential. The company’s distribution expansion strategy, particularly in tier-2 and tier-3 cities, is expected to boost penetration and sustain revenue growth.

While short-term headwinds such as commodity price fluctuations and high operational costs persist, analysts believe that Tata Consumer’s strategic focus on margin recovery and premiumization will drive long-term value for investors.

Highlights:

• Positive market reaction reflects strong investor confidence.

• Expansion in premium food and beverage segments is a major growth factor.

• Distribution expansion into smaller cities to support long-term growth.