DCF Studio

    TATACONSUM.NS · NSI · Consumer Defensive

    Tata Consumer Products Limited

    Also onConsensus Drift

    Implied value per share

    INR 328.92

    Market price

    INR 996.00

    Implied upside

    -67.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    NoteRisk-free rate is an assumption: INR assumption - no free live source available for this market.

    Current EV/EBITDA of 34.7x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    INR 328.92-67.0%
    Exit multiple
    INR 801.78-19.5%
    Market price
    INR 996.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (INR). Outflows negative.

    0bn18bn36bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayINR
    LineFY27FY28FY29FY30FY31CAGR
    RevenueINR 229.7bnINR 261.6bnINR 297.8bnINR 339.2bnINR 386.2bn+13.9%
    EBITINR 26.1bnINR 29.8bnINR 33.9bnINR 38.6bnINR 44.0bn+13.9%
    NOPATINR 19.9bnINR 22.6bnINR 25.8bnINR 29.4bnINR 33.4bn+13.9%
    Add depreciation & amortisationINR 6.5bnINR 7.4bnINR 8.4bnINR 9.5bnINR 10.9bn+13.9%
    Less capital expenditureINR -5.4bnINR -6.1bnINR -7.0bnINR -7.9bnINR -9.0bn+13.9%
    Less increase in working capitalINR 221.0mINR 251.6mINR 286.5mINR 326.3mINR 371.6m-13.9%
    Free cashflow to firmINR 21.2bnINR 24.1bnINR 27.5bnINR 31.3bnINR 35.7bn+13.9%
    Discount factor0.94730.85010.76290.68470.6144-
    Present valueINR 20.1bnINR 20.5bnINR 21.0bnINR 21.4bnINR 21.9bn+2.2%
    Present Value Of The ForecastINR 104.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate6.80%INR assumption - no free live source available for this market (assumption)
    Equity risk premium8.00%Market assumption
    Beta0.601Reported 0.405, pulled toward 1.0 (Blume)
    Cost of equity11.61%Risk-free + beta x equity risk premium
    Cost of debt6.80%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationINR 985.7bn97.2% of capital
    Total debtINR 28.2bn2.8% of capital, book value as a proxy
    Tax rate24.0%Effective, capped at statutory
    WACC11.43%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareINR 328.92

    66% of EV

    Forecast FCFF, final year
    INR 35.7bn
    Capex at depreciation, working capital in reinvestment
    INR 37.3bn
    Less reinvestment at g/ROIC (21.9% of NOPAT)
    INR -8.2bn
    Capitalised
    INR 29.2bn
    ROIC (WACC floor)
    11.4%
    Terminal value, undiscounted
    INR 334.9bn
    Terminal value, discounted
    INR 205.7bn
    Enterprise value
    INR 310.7bn
    Less net debt
    INR -15.0bn
    Equity value
    INR 325.7bn

    Exit at 20.0x EBITDA

    Value per shareINR 801.78

    87% of EV

    Terminal value, undiscounted
    INR 1096.9bn
    Terminal value, discounted
    INR 673.9bn
    Enterprise value
    INR 778.9bn
    Less net debt
    INR -15.0bn
    Equity value
    INR 793.9bn

    Spread between methods: 84%.

    Sensitivity

    Value per share (INR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.43%396.74398.07399.40400.74402.07
    10.43%358.42359.58360.74361.89363.05
    11.43%326.90327.91328.92329.94330.95
    12.43%300.52301.41302.31303.20304.10
    13.43%278.13278.93279.72280.52281.32

    Outlined: this model. Green text: above today's price of 996.00. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year13.9%46.6%+32.7pp
    EBIT margin11.4%38.0%+26.6pp
    Discount rate11.4%4.8%-6.6pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.