Tata Consumer Products downgraded to 'Sell' by MarketsMOJO due to negative results and expensive valuation.

Tata Consumer Products, a largecap company in the tea/coffee industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 22, 2024. This decision was based on negative results in September 2024, with a significant increase in interest expenses and a decrease in operating profit to interest ratio. Additionally, the company's PBT (profit before tax) minus OI (other income) was at its lowest at Rs 378.27 crore.
The company's ROE (return on equity) of 7.6 indicates an expensive valuation with a price to book value of 5.2. This is also reflected in the stock's trading at a premium compared to its historical valuations. While the stock has generated a return of 12.31% in the past year, its profits have only increased by 17.6%, resulting in a high PEG (price/earnings to growth) ratio of 5.8.

In terms of market performance, Tata Consumer Products has underperformed in the last year with a return of 12.31%, compared to the market (BSE 500) return of 31.91%. However, the company has a low debt to equity ratio and has shown healthy long-term growth with an annual increase in net sales and operating profit.

The technical trend for the stock is currently sideways, indicating no clear price momentum. This trend has deteriorated since October 22, 2024, when it was mildly bullish, resulting in a -1.84% return. The company also has a high institutional holding of 43.14%, indicating that these investors have better resources to analyze the company's fundamentals.

With a market cap of Rs 1,00,568 crore, Tata Consumer Products is the largest company in the tea/coffee industry, constituting 89.05% of the entire sector. Its annual sales of Rs 16,297.38 crore also make up 77.26% of the industry. While the company has shown strong growth and a dominant position in the market, the recent downgrade by MarketsMOJO suggests caution for potential investors.