Tata Group Stock to Buy Now for an Upside of 30%; Recommended by Morgan Stanley

Synopsis: Morgan Stanley sees 30 percent upside for Tata Consumer on strong Q4 revenue, expanding EBITDA margins, and robust earnings growth, underpinned by India Foods’ performance and operational efficiency.

The article highlights Tata Consumer Products’ strong Q4 outlook, driven by robust India Foods growth, improving EBITDA margins, and a solid earnings trajectory. Morgan Stanley sees 30 percent upside, signalling potential stock outperformance supported by operational efficiency and resilient profitability.

With a market capitalization of Rs 1 lakh crore, Tata Consumer Products Ltd’s shares closed at Rs. 1,053 per share, up by 1.08 percent from its previous close. The shares of the company gave a return of 55 percent in the last five years.

Brokerage View

Morgan Stanley expects upside for Tata Consumer, with a target price of Rs 1,361, driven by anticipated Q4 revenue and EBITDA margin growth, strong India Foods performance, and a robust earnings trajectory.

Rationale

Revenue Growth: Fourth-quarter revenue is expected to rise 14 percent year-on-year, supported by robust growth of around 18 percent in the India Foods business. Strong domestic demand, effective product strategies, and widening distribution channels are driving top-line expansion, reinforcing the company’s leadership position in the staples sector and sustaining investor confidence.

Margin Expansion: EBITDA margins are likely to improve to 14.1 percent, up approximately 60 basis points year-on-year. Enhanced cost efficiencies, better product mix, and disciplined expense management are contributing to margin expansion. This improvement signals operational resilience, providing a stable foundation for profitability despite input cost pressures and competitive market dynamics.

Strong Earnings Trajectory: Earnings are projected to grow at a compounded annual growth rate of 26 percent over FY26–28, the highest among staples coverage. Coupled with a recent stock correction of roughly 15 percent, this creates an attractive entry point for investors seeking potential outperformance, supported by strong fundamentals and consistent growth momentum.

Robust Growth and Margin Expansion

Consolidated revenue surged 15 percent YoY in Q3FY26, driven by strong performance in the India branded business, accelerated growth segments (up 29 percent YoY, crossing Rs 1,000 crore), Tata Sampann (45 percent), RTD (26 percent), and resilient international and non-branded sales.

EBITDA climbed 26 percent YoY, with margins expanding 120bps to 14.2 percent, supported by lower input costs in India Tea and solid profitability across key categories, reflecting efficient cost management and robust operational leverage.

About the Company

Tata Consumer Products Ltd. is one of the leading companies of the Tata Group, with a presence in the food and beverages business in India and internationally. In addition to South Asia (mainly India), it has presence in various other geographies including Canada, the UK, North America, Australia, Europe, the Middle East and Africa.

Financial highlights: The revenue from operations grew by 15 percent to Rs 5,112 crore in Q3 FY26, corresponding to the same quarter in the last financial year, and the operating margin grew from 13 percent to 14 percent YoY. Accompanied by a net profit growth of 36.5 percent to Rs 385 crore in Q3 FY26 from Rs 282 crore in Q3 FY25, resulting in EPS growth of 37.9 percent YoY to Rs 3.89 per share in Q3 FY26.

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