Tata Consumer Products (TCP) has been rising consistently even during the pandemic. The stock has risen over 80 percent from its March low of Rs 214 to currently trade at Rs 384.

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The stock is also the best performing FMCG stock in the Nifty FMCG index in 2020 till date. It has outperformed peers to gain nearly 20 percent in 2020 as compared to a 1 percent fall in the FMCG index and 15 percent fall in the benchmark Nifty.

Other FMCG peers like Britannia, Nestle, HUL were up around 12-14 percent YTD.

The stock is the top conviction pick of brokerage house Motilal Oswal. The brokerage believes that the company is well placed to ride India’s Rs 30 lakh crore consumption wave.

"To realize its vision, the group has not only consolidated Tata Chemical’s consumer business with TCP, but has also brought in a new CEO and MD – Mr. Sunil D'Souza – to steer the company in the right direction. The merger marks the company’s entry into an additional segment of staples, with addressable market size of Rs 77,000 crore," the report stated.

The brokerage believes that the Tata group’s long-term vision of creating a strong presence in the FMCG space remains intact and going forward, the strategy formulation and its execution is expected to be monitored under the new CEO & MD.

It further stressed that the merger is in line with Tata Group’s focus on creating a single FMCG-focused company and offers multiple synergies, including higher outlet coverage, focused new product development, stronger cash flow generation, and scale efficiencies.

Meanwhile, on implications of CVID, it said that the onset of pandemic impacted primary sales in March, however, revenues are now gradually returning to normal, it added.

"TCP deals in salt/tea/coffee, for which demand has not been materially impacted due to COVID-19. Though the company faced certain issues pertaining to the supply chain, it is returning to normal day by day," the brokerage noted.

The brokerage finally said that it is positive on TCP given its strong balance sheet, robust FCF generation and excellent management quality.

First Published:Jun 26, 2020 5:07 PM IST