Why Tata Consumer Share Price is Rising

The Indian Fast Moving Consumer Goods (FMCG) sector has been buzzing with bullish momentum since its recovery in 2020.

The positive trend has continued over the last three years. The sector has experienced significant growth and resilience in recent times.

We have seen a remarkable doubling in the value of the Nifty FMCG index over the past three years. It's up 16% this year.

This clearly indicates the sector's robust performance and investor confidence in the stock market.

As consumers' purchasing power improves and consumption patterns evolve, the FMCG sector appears poised to capitalise on these opportunities for further growth and profitability.

This bodes well for Tata group company Tata Consumer. It operates within the FMCG sector and is likely to benefit from the sector's positive sentiment and positive outlook as per technical analysis.

In this article, we will analyse the recent breakout in the stock price of Tata Consumer.

The Bullish Chart Pattern

The Nifty FMCG index gains exceeding 16% this year so far suggest a favourable environment for Tata Consumer's stock price.

Tata Consumer Weekly Chart

 

The stock price of Tata Consumer has recently experienced a significant breakout from a prolonged period of consolidation.

The consolidation phase, lasting for 92 weeks, formed a symmetrical triangle pattern.

Such patterns typically indicate a period of indecision and a balance between buying and selling pressure.

The breakout from this symmetrical triangle pattern at Rs 850 suggests the stock has gained significant bullish momentum.

Following the breakout from the symmetrical triangle, the stock price has formed a bullish pennant pattern.

A bullish pennant is a continuation pattern that typically occurs after a strong price move.

The consolidation within the pennant formation represents a brief pause before further upward movement. This pattern further supports the potential for an upward price surge in the stock.

The breakout from the symmetrical triangle, subsequent formation of the bullish pennant pattern, and the outperformance of the Nifty FMCG, index suggests the stock has the potential for significant upside in the coming weeks and months.

The failure of this technical analysis pattern at Rs 750 poses a potential risk of 12% from the current market price of Rs 855.

While technical analysis patterns can provide valuable insights and guide investment decisions, they do not guarantee success or accurately predict future price movements.

Traders and investors should exercise caution and carefully manage their risk exposure.

Employ risk management strategies, set appropriate stop-loss orders, and conduct thorough research before making any investment decisions.

Now how does the stock look from a fundamental perspective?

Fundamental Analysis of Tata Consumer

Even from a fundamental perspective, Tata Consumer is riding on multiple tailwinds.

In its annual report, released to the exchanges a month ago, the Tata company said it's expanding its presence in the southern markets.

It's also focussed on building distribution channels in rural and semi-urban markets.

The annual report went on to add that Tata Consumer continues to gain market share in the South India in the tea and coffee markets.

In tea, Tata Consumer's Chakra Gold and Kanan Devan brands continued to make strong inroads in the south and Tata Coffee Grand was restaged with a new pack design.

In FY23, Tata Consumer launched 34 products and as a result, the company's revenue grew by 11% to Rs 137.8 billion. Profit rose 8% to Rs 11.6 bn.

The company's Indian tea business and international margins were hit by inflation. Even the volumes were lower this year.

Currently, the company's branded tea segment contributes to most of the revenue which is primarily driven by the Indian market.

The coffee segment contributes around 11%. The company has allocated a capex of Rs 4 billion to expand in both these segments.

Many brokerage houses have initiated coverage on the stock after its recent performance, which could also be the reason why Tata Consumer share price is rising.

How Tata Consumer Share Price has Performed Recently

In the past one month, Tata Consumer share price has gained over 8%. On a year to date basis, the stock is up 12%.

While in the past five days, Tata Consumer share price has rallied about 19%.

Tata Consumer has a 52-week high of Rs 877 and a 52-week low of Rs 686.

About Tata Consumer Products

Tata Consumer Products is a focused consumer products company uniting the principal food and beverage interests of the Tata Group under one umbrella.

The company's portfolio of products includes tea, coffee, water, salt, pulses, spices, ready-to-cook offerings, breakfast cereals, snacks and mini meals.

In India, Tata Consumer Products has a reach of over 200 million households, giving it an unparalleled ability to leverage the Tata brand in consumer products.

To know more about the company, check out Tata Consumer Products company fact sheet and quarterly results.

For a sector overview, read our FMCG sector report.

You can also compare Tata Consumer with its peers.

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Tata Consumer vs Tata Coffee

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