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7 Reasons to Buy Tata Consumer Product shares

TATA Consumer Product Limited:


Tata consumer product ltd. operating in FMCG sector is an Indian multinational company established in the year 1964 as a joint venture with UK based company JAMES FINLAY and company by understanding the growing demand of tea. Tata consumer product is a subsidiary company of Tata group, headquartered in Kolkata, West Bengal. 


Tata consumer products
Tata Consumer Product Brands
Source: Google| Created by Freefincal.com


The company deals with many consumer products brands such as Tata salt, Tetley, Tata Tea, Tata Sampann etc. Tata Tea is the largest selling brand in India and Tetley is the largest selling brand in Canada. In this article we discuss all the points why we should invest in Tata consumer product stock. 

7 REASONS TO BUY TATA CONSUMER PRODUCTS SHARES:

KEY POINTS:









1) Fundamental Analysis:

Income Statement:


Quarterly December 2020 September 2020 June 2020
Sales 3069 2781 2713
Other Income 19 26 32
Total Income 3089 2087 2746
Total Expenditure 2778 2468 2229
EBIT 310 339 516
Interest 18 17 17
Tax 55 87 110
Net Profit after Tax 237 234 389

As shown in the above table sales of the company is rising both on qoq basis and yoy basis which results in rise in company revenue from operation. The net profit of the company for December 2020 is rised as compare to September quarter but it declines as compare to June quarter. 

This is because of  the covid 19. During this period peoples are worried about if lockdown is imposed they can not get the necessities. So, they have bought the FMCG products in advance. So, the net profit of the June quarter is rised. Whereas after lockdown ends the cost materials and distribution cost has been increased which is results in increase in companies expenditure as you can see in the above table. So, the company's profit is decline from June quarter but it is increased YOY basis. 


Balancesheet:


Equities &
Liabilities
March
2020
March
2019
March
2018
Share
Capital
92 63 63
Reserves &
Surplus
13722 7268 6968
Current
Libalities
1978 1469 1596
Other
Liabilities
2709 2137 1964
Total
Liabilities
18502 10938 10592
Assets
Fixed
Assets
4417 1552 1209
Current
Assets
5682 4547 4535
Other
Assets
8402 4838 4847
Total
Assets
18502 10938 10592

In the above table we can see that companies reserves is increasing yoy basis which means company is making good profit. Which is good sign for investors point of view. The company can give bonus or dividend to its shareholders any time. Also, companies assets are also rising yoy basis which means company is continously growing its business by investing in new assets and properties. 



2) FII And DII Data:


Because of dollars value declined foreign investors are more attracted towards Indian stock market. At present they drive the market if they buys then sensex and nifty goes up and if they sells the sensex and nifty falls. So, it's important to check the FII and DII data. 

SummaryDecember
2020
September
2020
June
2020
FII25.70%21.70%19.50%
DII13.60%17.70%19.80%

Foreign investors  has increased their investment from quater to quarter but DII'S decreased their investment from quarter to quarter. 

 

3) Entry in Nifty 50 Index:


According to exchange circular dated February 23 Tata consumer products will going to be the part of Nifty 50 Index by excluding Gail India changes will made from 31st March,2021.

Entry in Nifty 50 Index is always beneficial for that stock as it attracts Mutual funds companies and other financial institutions to invest in it. After inclusion in Nifty 50 index it seen that 5 years of that company is very special in aspects of investment. 

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4) Benefit of Goodwill:

As the company has different well known products which are very popular in India such as Tata Salt, Tata Tea etc. It enjoys the benefit of Goodwill. You may be heard this line -
" T for 'Tata' and T for 'Trust'"


 5) Low share Price:

Share price of Tata consumer product is Rs. 620(As of 22 March, 2021) as compare other FMCG stocks such HUL Rs. 2353.20,Britannia Rs. 3564.40 and Nestle Rs. 16588.05 except ITC and Marico. 

 

6) Dividend paying Stock:


Announced on Ex date Dividend%
May 14, 2020 June 18, 2020 270%
April 23, 2019 May 24, 2019 250%
May 11, 2018 June 20, 2018 250%
May 31, 2017 August 04, 2017 235%
May 25, 2016 August 08, 2016 225%


 Dividend is like a bonus for the investors apart from the capital gain enjoyed by the investors by increase in share price of the company.
As shown in the above image Tata consumer product pays good dividend to its shareholders  consistanly  from 5 years. 

 

7) Safe:

Tata consumer product is very safe to invest because of its features such as debt free stock, increasing reserves and surplus, increasing return on equity,good cash flow inclusion in Nifty 50 index and also a special feature is it belongs to Tata group who's management is so professional and experienced. 

The company management is capable to deal with all the uncertainties and tough situations and keep the company to track of progress. 


Closing Thought:


According to our study Tata Consumer products share is the best FMCG sector stock at present time. We have observed the company's fundamentals very carefully. 

The company have no debt and enough cash flow to meet the short term capital requirements. Also, the company is added to Nifty 50 index due to which most of the mutual funds and financial institutions may look it to make investment in it. Which may leads to rise in stock price. Many famous brokering firms have given huge targets to Tata consumer share. 

As per our view if you are looking to invest in FMCG sector than you can invest in Tata consumer products share. 

I hope you like this article, to read such article stay connected with us and if you have any query write in comment box. 








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