Tata Consumer Share Price Target: Should You Buy Stock After Rs 6,500 Cr Fundraise Announcement?

tata consumer share price target: should you buy stock after rs 6,500 cr fundraise announcement?

Tata Consumer Products share price target: Tata Consumer Products’ Board of Directors has approved a Rs 6,500-crore fundraising initiative to finance its recent acquisitions of Capital Foods and Organic India, the fast-moving consumer goods (FMCG) company announced on Friday. Tata Consumer revealed its plan to issue commercial papers up to Rs 3,500 crore. These funds are earmarked as bridge financing for the acquisition payments for stakes in Capital Foods Private and Organic India.

Funding Organic India, Capital Foods Acquisitions

In addition to the commercial paper, Tata Consumer aims to raise an additional Rs 3,000 crore through a rights issue. This will involve issuing equity shares to existing shareholders. The specifics regarding the issue price, entitlement ratio, record date, and payment terms will be disclosed at a later date.

Tata Consumer Products recently acquired Capital Foods, known for brands like Ching’s Secret and Smith & Jones, and Fabindia-backed Organic India. These acquisitions mark the Tata Group firm’s entry into the desi-Chinese food segment and expand its portfolio in health products. The company plans to acquire a 75 per cent stake in Capital Foods initially, with the remaining 25 per cent to be bought over the next three years, valuing the company at Rs 5,100 crore for a complete buyout. Additionally, Tata Consumer will fully acquire Organic India for Rs 1,900 crore.

Tata Consumer Product Shares Price Target

Given the latest development, should investors consider buying Tata Consumer Products shares?

Brokerage firm Motilal Oswal highlighted Tata Consumer Products’ overarching strategy, which includes strengthening core businesses, exploring new opportunities, unlocking synergies, digitizing supply chains, expanding product portfolios, focusing on premiumization and health & wellness products, embedding sustainability, and enhancing sales and distribution infrastructure.

The acquisitions of Capital Foods and Organic India are expected to contribute significantly to the incremental profit after tax (PAT) for FY25/26 and aid in margin expansion.

Motilal Oswal projects a 13 per cent compounded annual growth rate (CAGR) in revenue over FY23-26. The domestic brokerage house expects a 25 per cent CAGR in PAT over the same time period. The firm has assigned a “BUY” rating to the company, with a target price of Rs 1,350 per share.

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