1. Date - 26th November, 2013Date - 26th November, 2013Date - 26 November, 2013
Tata global beverages ltd. - BUYTata global beverages ltd. - BUYTata global beverages ltd. - BUYTata global beverages ltd. - BUYTata global beverages ltd. - BUY
CMP - INR 142.00 TP - INR 162.00 RiskCMP - INR 142.00 TP - INR 162.00 RiskCMP - INR 142.00 TP - INR 162.00 Risk
TH - 12 Months Up Side - 15.00 % ReturnTH - 12 Months Up Side - 15.00 % Return
We initiate investment note on Tata global beverages ltd. (TataWe initiate investment note on Tata global beverages ltd. (TataWe initiate investment note on Tata global beverages ltd. (Tata
with a DCF valuation based Price target of 162 over a periodwith a DCF valuation based Price target of 162 over a periodwith a DCF valuation based Price target of 162 over a period
representing a potential upside of 15%. At CMP of 142, therepresenting a potential upside of 15%. At CMP of 142, therepresenting a potential upside of 15%. At CMP of 142, the
19.52x and 17.50x its estimated earnings for FY14 and FY15,19.52x and 17.50x its estimated earnings for FY14 and FY15,
global presence, strong brand image and favorable raw materialglobal presence, strong brand image and favorable raw materialglobal presence, strong brand image and favorable raw material
attractive points of TGBL which lead the top and bottom lineattractive points of TGBL which lead the top and bottom lineattractive points of TGBL which lead the top and bottom line
9.24% and 14.54% respectively, over the period of FY13A to9.24% and 14.54% respectively, over the period of FY13A to9.24% and 14.54% respectively, over the period of FY13A to
stock as a potential investment opportunity.stock as a potential investment opportunity.stock as a potential investment opportunity.
Investment rationaleInvestment rationaleInvestment rationale
Strong brand equity with acquisitions and partnerships with Starbucks & PepsiCoStrong brand equity with acquisitions and partnerships with Starbucks & PepsiCo
Strong brand image of “Tea products” are the major strengthStrong brand image of “Tea products” are the major strengthStrong brand image of “Tea products” are the major strength
contributed 72% of revenue in top line number. Tea revenue grewcontributed 72% of revenue in top line number. Tea revenue grewcontributed 72% of revenue in top line number. Tea revenue grew
over last five years at a CAGR of 8.85%, instead of an expectedover last five years at a CAGR of 8.85%, instead of an expectedover last five years at a CAGR of 8.85%, instead of an expected
respectively over the period of FY13A to FY18E. TGBL hasrespectively over the period of FY13A to FY18E. TGBL hasrespectively over the period of FY13A to FY18E. TGBL has
opportunity not only in India but across the globe. Acquisitionsopportunity not only in India but across the globe. Acquisitionsopportunity not only in India but across the globe. Acquisitions
Starbucks & Pepsico offer a huge market potential for the companyStarbucks & Pepsico offer a huge market potential for the companyStarbucks & Pepsico offer a huge market potential for the company
its products in local & global markets.its products in local & global markets.its products in local & global markets.
Impressive global presence helps to continue the growth at sameImpressive global presence helps to continue the growth at same
Healthy growth has been added by its global presence in tea segment,Healthy growth has been added by its global presence in tea segment,Healthy growth has been added by its global presence in tea segment,
value share of Tata Tea), Canada (Tetley), UK (27% value sharevalue share of Tata Tea), Canada (Tetley), UK (27% value sharevalue share of Tata Tea), Canada (Tetley), UK (27% value share
of leading brands across the globe, Joekels in South Africa (thirdof leading brands across the globe, Joekels in South Africa (thirdof leading brands across the globe, Joekels in South Africa (third
Earth in US (21% volume share), Jemca in Czech Republic (whichEarth in US (21% volume share), Jemca in Czech Republic (whichEarth in US (21% volume share), Jemca in Czech Republic (which
and Vitax in Poland (16% share of fruit tea market). Withand Vitax in Poland (16% share of fruit tea market). Withand Vitax in Poland (16% share of fruit tea market). With
presence, we believe that TGBL would continue to grow its teapresence, we believe that TGBL would continue to grow its teapresence, we believe that TGBL would continue to grow its tea
pace further.pace further.
Favorable fall down in Kenya tea pricesFavorable fall down in Kenya tea pricesFavorable fall down in Kenya tea prices
Majority of Tetley Teas requirement is sourced from Kenya. SinceMajority of Tetley Teas requirement is sourced from Kenya. SinceMajority of Tetley Teas requirement is sourced from Kenya. Since
are fall down by 24.86% on a yoy basis till Oct 2013 it will helpare fall down by 24.86% on a yoy basis till Oct 2013 it will helpare fall down by 24.86% on a yoy basis till Oct 2013 it will help
material cost across geographies which would also help supportmaterial cost across geographies which would also help supportmaterial cost across geographies which would also help support
BUYBUYBUYBUYBUY
Risk - MediumRisk - MediumRisk - Medium
Return - Medium “Over 15 % “Return - Medium “Over 15 % “
(Tata Global) as a BUY(Tata Global) as a BUY(Tata Global) as a BUY
period of 12 months Market Dataperiod of 12 months Market Data
Sensex 20425
period of 12 months
the stock is trading at Sensex 20425
the stock is trading at Sensex 20425
Equity Shares (Cr) 61.84
the stock is trading at
respectively. Strategic
Equity Shares (Cr) 61.84
Face Value (INR) 1.00
respectively. Strategic
material cost are the most
Face Value (INR) 1.00
material cost are the most
Face Value (INR) 1.00
Avg Vol (‘000) 2899material cost are the most
numbers at a CAGR of
Avg Vol (‘000) 2899
numbers at a CAGR of
Avg Vol (‘000) 2899
52-wk HI/LO (INR) 174.35/122.00numbers at a CAGR of
to FY16E. we rate this
52-wk HI/LO (INR) 174.35/122.00
Free Float (Cr) 40.20to FY16E. we rate this Free Float (Cr) 40.20to FY16E. we rate this Free Float (Cr) 40.20
O/S shares (Cr) 61.84O/S shares (Cr) 61.84O/S shares (Cr) 61.84
Market Cap (Cr) 8781Market Cap (Cr) 8781
Y/E Mar (Cr) FY13A FY14E FY15E FY16E
cquisitions and partnerships with Starbucks & PepsiCo
Y/E Mar (Cr) FY13A FY14E FY15E FY16E
Net Sales 7351 8033 8779 9596
cquisitions and partnerships with Starbucks & PepsiCo
strength of TGBL which
Net Sales 7351 8033 8779 9596
strength of TGBL which
Net Sales 7351 8033 8779 9596
GP 2793 3019 3301 3612strength of TGBL which
grew at moderate pace
GP 2793 3019 3301 3612
grew at moderate pace
GP 2793 3019 3301 3612
OP 663 770 843 925grew at moderate pace
CAGR growth of 9.00%
OP 663 770 843 925
PBT 473 550 602 660CAGR growth of 9.00% PBT 473 550 602 660CAGR growth of 9.00%
has substantial growth
PBT 473 550 602 660
Net Profit 373 450 502 560has substantial growth Net Profit 373 450 502 560has substantial growth
Acquisitions & partnerships with
Net Profit 373 450 502 560
EPS 6.03 7.27 8.11 9.06Acquisitions & partnerships with EPS 6.03 7.27 8.11 9.06
DPS 2.15 2.33 2.43 2.45
Acquisitions & partnerships with
company as it can market
DPS 2.15 2.33 2.43 2.45
company as it can market
DPS 2.15 2.33 2.43 2.45
ROE (%) 7.75% 8.84% 9.27% 9.67%
company as it can market
ROE (%) 7.75% 8.84% 9.27% 9.67%
ROA (%) 6.24% 7.10% 7.49% 7.85%ROA (%) 6.24% 7.10% 7.49% 7.85%
same pace further
ROA (%) 6.24% 7.10% 7.49% 7.85%
P/E (X) 23.62 19.52 17.5 15.68same pace further
segment, in India (22%
P/E (X) 23.62 19.52 17.5 15.68
segment, in India (22%
P/E (X) 23.62 19.52 17.5 15.68
P/BV (X) 1.83 1.73 1.62 1.52segment, in India (22%
share of Tetley), acquisition
P/BV (X) 1.83 1.73 1.62 1.52
share of Tetley), acquisitionshare of Tetley), acquisition
(third largest player), Good Holding Q3FY13 Q4FY13 Q1FY14 Q2FY14(third largest player), Good Holding Q3FY13 Q4FY13 Q1FY14 Q2FY14(third largest player), Good
(which is the market leader)
Holding Q3FY13 Q4FY13 Q1FY14 Q2FY14
Promoter 35.20% 35.20% 35.20% 35.10%(which is the market leader) Promoter 35.20% 35.20% 35.20% 35.10%
FII 19.13% 17.77% 17.85% 20.61%
(which is the market leader)
With this strong s globe
FII 19.13% 17.77% 17.85% 20.61%
With this strong s globe
FII 19.13% 17.77% 17.85% 20.61%
DII 19.17% 18.46% 18.50% 16.89%
With this strong s globe
tea revenues at the same
DII 19.17% 18.46% 18.50% 16.89%
Other 29.43% 31.37% 31.45% 29.68%tea revenues at the same Other 29.43% 31.37% 31.45% 29.68%tea revenues at the same Other 29.43% 31.37% 31.45% 29.68%
Analyst Details
Since Kenyan tea prices
Analyst Details
Pushkaraj JamsandekarSince Kenyan tea prices Pushkaraj JamsandekarSince Kenyan tea prices
help TGBL lower its raw
Pushkaraj Jamsandekar
9869139507help TGBL lower its raw 9869139507help TGBL lower its raw
support its margins.
9869139507
pushkarajjamsandekar@yahoo.com
support its margins. pushkarajjamsandekar@yahoo.com
Perception Research & Advisory
support its margins.
Perception Research & AdvisoryPerception Research & Advisory
2. Company backgroundCompany backgroundCompany background
Tata Global Beverages Limited, through its subsidiaries, joint venturesTata Global Beverages Limited, through its subsidiaries, joint venturesTata Global Beverages Limited, through its subsidiaries, joint ventures
a global beverages company engaged in the trading, productiona global beverages company engaged in the trading, productiona global beverages company engaged in the trading, production
tea, coffee and water. The Company operates in three segments,tea, coffee and water. The Company operates in three segments,tea, coffee and water. The Company operates in three segments,
cultivation and manufacture of black tea and instant tea, tea buying/blendingcultivation and manufacture of black tea and instant tea, tea buying/blending
tea in bulk or value added form; Coffee and Other Produce, which
cultivation and manufacture of black tea and instant tea, tea buying/blending
tea in bulk or value added form; Coffee and Other Produce, whichtea in bulk or value added form; Coffee and Other Produce, which
coffee, pepper and other plantation crops and conversion of coffeecoffee, pepper and other plantation crops and conversion of coffeecoffee, pepper and other plantation crops and conversion of coffee
as roast and ground coffee and instant coffee, and Others, whichas roast and ground coffee and instant coffee, and Others, whichas roast and ground coffee and instant coffee, and Others, which
mineral water, other minor crops, curing operations of coffeemineral water, other minor crops, curing operations of coffeemineral water, other minor crops, curing operations of coffee
required for coffee plantations.required for coffee plantations.required for coffee plantations.
Share holding patternShare holding patternShare holding pattern
Y/E March 31 FY13Q2 FY13Q3 FY13Q4Y/E March 31 FY13Q2 FY13Q3 FY13Q4
(A) Promoter Group 35.57% 35.57% 35.55%(A) Promoter Group 35.57% 35.57% 35.55%(A) Promoter Group 35.57% 35.57% 35.55%
Bodies Corporate 35.57% 35.57% 35.55%Bodies Corporate 35.57% 35.57% 35.55%
(B) Public Shareholding(B) Public Shareholding(B) Public Shareholding
(1) Institutions 0.40% 0.39% 0.37%(1) Institutions 0.40% 0.39% 0.37%
Mutual Funds / UTI 4.86% 4.22% 4.29%Mutual Funds / UTI 4.86% 4.22% 4.29%Mutual Funds / UTI 4.86% 4.22% 4.29%
Financial Institutions / Banks 13.14% 10.93% 10.69%Financial Institutions / Banks 13.14% 10.93% 10.69%
Government State / Central 0.03% 0.03% 0.03%
Financial Institutions / Banks 13.14% 10.93% 10.69%
Government State / Central 0.03% 0.03% 0.03%Government State / Central 0.03% 0.03% 0.03%
Insurance Companies 5.43% 4.18% 3.62%Insurance Companies 5.43% 4.18% 3.62%Insurance Companies 5.43% 4.18% 3.62%
Foreign Institutional Investors 16.69% 19.33% 17.94%Foreign Institutional Investors 16.69% 19.33% 17.94%
(2) Non-Institutions 0.02% 0.03% 0.03%(2) Non-Institutions 0.02% 0.03% 0.03%(2) Non-Institutions 0.02% 0.03% 0.03%
Bodies Corporate 2.43% 2.96% 2.83%Bodies Corporate 2.43% 2.96% 2.83%
(3) Individuals 0.22% 0.23% 0.25%(3) Individuals 0.22% 0.23% 0.25%(3) Individuals 0.22% 0.23% 0.25%
Individual holding up to Rs. 1 lakh 20.25% 20.98% 22.83%Individual holding up to Rs. 1 lakh 20.25% 20.98% 22.83%
Individual holding excess of Rs. 1 lakh 0.84% 0.96% 1.06%Individual holding excess of Rs. 1 lakh 0.84% 0.96% 1.06%Individual holding excess of Rs. 1 lakh 0.84% 0.96% 1.06%
Others 0.77% 0.83% 1.14%Others 0.77% 0.83% 1.14%
Total 100.00% 100.00% 100.00%
Others 0.77% 0.83% 1.14%
Total 100.00% 100.00% 100.00%Total 100.00% 100.00% 100.00%
ventures and associates, isventures and associates, isventures and associates, is
production and distribution ofproduction and distribution ofproduction and distribution of
segments, Tea, which includessegments, Tea, which includessegments, Tea, which includes
buying/blending and sale ofbuying/blending and sale of
which includes cultivation of
buying/blending and sale of
which includes cultivation ofwhich includes cultivation of
coffee into products, suchcoffee into products, suchcoffee into products, such
which includes sale of naturalwhich includes sale of naturalwhich includes sale of natural
coffee and trading of itemscoffee and trading of itemscoffee and trading of items
FY13Q4 FY14Q1 FY14Q2 % QOQ % SPLYFY13Q4 FY14Q1 FY14Q2 % QOQ % SPLY
35.55% 35.54% 35.61% 0.20% 0.11%35.55% 35.54% 35.61% 0.20% 0.11%
Q2FY14
35.55% 35.54% 35.61% 0.20% 0.11%
35.55% 35.54% 35.61% 0.20% 0.11% Q2FY1435.55% 35.54% 35.61% 0.20% 0.11% Q2FY14Q2FY14
0.37% 0.37% 0.38% 3.62% -5.23% Promoter FII DII Other0.37% 0.37% 0.38% 3.62% -5.23%
4.29% 4.64% 4.28% -7.76% -11.93%
Promoter FII DII Other
4.29% 4.64% 4.28% -7.76% -11.93%4.29% 4.64% 4.28% -7.76% -11.93%
10.69% 10.52% 9.64% -8.37% -26.64%10.69% 10.52% 9.64% -8.37% -26.64%
0.03% 0.03% 0.08% 166.67% 166.67%
10.69% 10.52% 9.64% -8.37% -26.64%
0.03% 0.03% 0.08% 166.67% 166.67%0.03% 0.03% 0.08% 166.67% 166.67%
3.62% 3.50% 3.14% -10.29% -42.17%3.62% 3.50% 3.14% -10.29% -42.17%
29%
3.62% 3.50% 3.14% -10.29% -42.17%
17.94% 18.03% 20.91% 15.97% 25.28% 34%29%17.94% 18.03% 20.91% 15.97% 25.28%
0.03% 0.03% 0.02% -23.76% -4.94%
34%29%
0.03% 0.03% 0.02% -23.76% -4.94%0.03% 0.03% 0.02% -23.76% -4.94%
2.83% 3.03% 2.31% -23.76% -4.94%2.83% 3.03% 2.31% -23.76% -4.94%
0.25% 0.25% 0.24% -2.79% 9.93% 17%0.25% 0.25% 0.24% -2.79% 9.93%
20%
17%0.25% 0.25% 0.24% -2.79% 9.93%
22.83% 22.47% 21.88% -2.63% 8.05% 20%
17%
22.83% 22.47% 21.88% -2.63% 8.05%
1.06% 1.01% 0.98% -2.97% 16.67%
20%
1.06% 1.01% 0.98% -2.97% 16.67%1.06% 1.01% 0.98% -2.97% 16.67%
1.14% 1.24% 1.17% -5.65% 51.95%1.14% 1.24% 1.17% -5.65% 51.95%
100.00% 100.00% 100.00% 0.00% 0.00%
1.14% 1.24% 1.17% -5.65% 51.95%
100.00% 100.00% 100.00% 0.00% 0.00%100.00% 100.00% 100.00% 0.00% 0.00%
3. Investment rationaleInvestment rationale
Strong brand equity with acquisitions and partnerships with Starbucks & PepsicoStrong brand equity with acquisitions and partnerships with Starbucks & PepsicoStrong brand equity with acquisitions and partnerships with Starbucks & Pepsico
Strong brand image of “Tea products” are the major strength ofStrong brand image of “Tea products” are the major strength ofStrong brand image of “Tea products” are the major strength of
72% of revenue in top line number. Tea revenue grew at moderate72% of revenue in top line number. Tea revenue grew at moderate72% of revenue in top line number. Tea revenue grew at moderate
years at a CAGR of 8.85%, instead of an expected CAGR growthyears at a CAGR of 8.85%, instead of an expected CAGR growthyears at a CAGR of 8.85%, instead of an expected CAGR growth
over the period of FY13A to FY18E. TGBL has substantial growthover the period of FY13A to FY18E. TGBL has substantial growthover the period of FY13A to FY18E. TGBL has substantial growth
India but across the globe. Acquisitions & partnerships with StarbucksIndia but across the globe. Acquisitions & partnerships with StarbucksIndia but across the globe. Acquisitions & partnerships with Starbucks
huge market potential for the company as it can market its productshuge market potential for the company as it can market its productshuge market potential for the company as it can market its products
markets.markets.
Exhibit 01: Growth in Tea revenueExhibit 01: Growth in Tea revenueExhibit 01: Growth in Tea revenue
6851 12%8000
6285
6851
11%
12%8000
5290
5766
6285
6851
11%
10%
4767
5290
5766
9% 9% 9%
10%
6000
4767
5290 9% 9% 9%
8%
6000
6% 6%
8%
4000 6% 6%4000
4%
6%4000
4%
2000
2%
4%
2000
2%
2000
0%0 0%0
FY12A FY13A FY14E FY15E FY16EFY12A FY13A FY14E FY15E FY16E
Tea GrowthTea Growth
Source: Perception Research & AdvisorySource: Perception Research & Advisory
Exhibit 03: Growth in paper and other revenueExhibit 03: Growth in paper and other revenue
50%120
100
50%120
90 95 100
42%
50%
100
120
80
86 90 95
42% 40%100
80
8642% 40%
80
100
30%
80
30%
60
80
20%
60
20%
40
20%
40
8% 10%20 8%
5% 5% 5%
10%20
5% 5% 5%
0%0 0%0
FY12A FY13A FY14E FY15E FY16EFY12A FY13A FY14E FY15E FY16E
Paper & Other Growth
Source: Perception Research & Advisory
Paper & Other Growth
Source: Perception Research & AdvisorySource: Perception Research & Advisory
cquisitions and partnerships with Starbucks & Pepsicocquisitions and partnerships with Starbucks & Pepsicocquisitions and partnerships with Starbucks & Pepsico
of TGBL which contributedof TGBL which contributedof TGBL which contributed
moderate pace over last fivemoderate pace over last fivemoderate pace over last five
growth of 9.00% respectivelygrowth of 9.00% respectivelygrowth of 9.00% respectively
growth opportunity not only ingrowth opportunity not only ingrowth opportunity not only in
Starbucks & Pepsico offer aStarbucks & Pepsico offer aStarbucks & Pepsico offer a
products in local & globalproducts in local & globalproducts in local & global
Exhibit 02: Growth in Coffee revenueExhibit 02: Growth in Coffee revenueExhibit 02: Growth in Coffee revenue
25%3000
2472
25%3000
2043
2247
2472
20% 20%2500
1857
2043
2247
20% 20%2500
1706
1857
2043
15%
2000 1706
15%
1500
2000
15%
1500
9% 10% 10% 10% 10%
1000
1500
9% 10% 10% 10% 10%
1000
5%500
1000
5%500
0%0 0%0
FY12A FY13A FY14E FY15E FY16EFY12A FY13A FY14E FY15E FY16E
Coffee GrowthCoffee Growth
Source: Perception Research & AdvisorySource: Perception Research & Advisory
Exhibit 04:NIM - Growth in Total revenueExhibit 04:NIM - Growth in Total revenue
12%12000 12%12000
8781
9597
12%
10000
12000
8034
8781
9597
11% 11%
11%10000
6633
7352
8034
8781
11% 11%
11%
8000
10000
6633
735211% 11%
11%
8000 6633
11%
6000
10%
6000
10%
4000
10%
4000
9% 9%
10%2000
9% 9% 9%
10%2000
9% 9% 9%
9%0 9%0
FY12A FY13A FY14E FY15E FY16EFY12A FY13A FY14E FY15E FY16E
Total Revenue Growth
Source: Perception Research & Advisory
Total Revenue Growth
Source: Perception Research & AdvisorySource: Perception Research & Advisory
4. Impressive global presence helps to continue the growth at sameImpressive global presence helps to continue the growth at same
Healthy growth has been added by its global presence in teaHealthy growth has been added by its global presence in teaHealthy growth has been added by its global presence in tea
value share of Tata Tea), Canada (Tetley), UK (27% value sharevalue share of Tata Tea), Canada (Tetley), UK (27% value sharevalue share of Tata Tea), Canada (Tetley), UK (27% value share
leading brands across the globe, Joekels in South Africa (third largestleading brands across the globe, Joekels in South Africa (third largestleading brands across the globe, Joekels in South Africa (third largest
in US (21% volume share), Jemca in Czech Republic (which isin US (21% volume share), Jemca in Czech Republic (which isin US (21% volume share), Jemca in Czech Republic (which is
Vitax in Poland (16% share of fruit tea market). With this strongVitax in Poland (16% share of fruit tea market). With this strongVitax in Poland (16% share of fruit tea market). With this strong
believe that TGBL would continue to grow its tea revenues at thebelieve that TGBL would continue to grow its tea revenues at thebelieve that TGBL would continue to grow its tea revenues at the
Favorable fall down in Kenya tea pricesFavorable fall down in Kenya tea pricesFavorable fall down in Kenya tea prices
Majority of Tetley Teas requirement is sourced from Kenya. SinceMajority of Tetley Teas requirement is sourced from Kenya. Since
fall down by 24.86% on a yoy basis till Oct 2013 it will help TGBLfall down by 24.86% on a yoy basis till Oct 2013 it will help TGBLfall down by 24.86% on a yoy basis till Oct 2013 it will help TGBL
cost across geographies which would also help support its marginscost across geographies which would also help support its marginscost across geographies which would also help support its margins
Exhibit 05: Kenya tea pricesExhibit 05: Kenya tea pricesExhibit 05: Kenya tea prices
400400
300300
200200200
100100
00
11
11
11
12
12
12
12
12
12
12
12
12
12
12
12
13
13
13
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Nov
Dec
Feb
Mar
May
Aug
Sep
Nov
Dec
Feb
Mar
PricePrice
Source: Perception Research & AdvisorySource: Perception Research & Advisory
Exhibit 06: Change in Kenya tea pricesExhibit 06: Change in Kenya tea prices
4.00%4.00%
2.00%
4.00%
2.00%
0.00%
-2.00%
0.00%
-2.00%
11
11
11
12
12
12
12
12
12
12
12
12
12
12
12
13
13
-4.00%
-2.00%
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
-4.00%
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
-6.00%
Nov
Mar
May
Aug
Nov
-8.00%
-6.00%
-8.00%
-10.00%
-8.00%
-10.00%
-12.00%-12.00%
Source: Perception Research & AdvisorySource: Perception Research & AdvisorySource: Perception Research & Advisory
same space furthersame space further
tea segment, in India (22%tea segment, in India (22%tea segment, in India (22%
share of Tetley), acquisition ofshare of Tetley), acquisition ofshare of Tetley), acquisition of
largest player), Good Earthlargest player), Good Earthlargest player), Good Earth
is the market leader) andis the market leader) andis the market leader) and
strong s globe presence, westrong s globe presence, westrong s globe presence, we
the same space further.the same space further.the same space further.
Since Kenyan tea prices areSince Kenyan tea prices are
TGBL lower its raw materialTGBL lower its raw materialTGBL lower its raw material
margins.margins.margins.
13
13
13
13
13
13
13
13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Mar
May
Aug
Sep
13
13
13
13
13
13
13
13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Mar
May
Aug
6. ValuationValuation
Exhibit 08: Tata global beverages ltd. Valuation (Rs In Cr)Exhibit 08: Tata global beverages ltd. Valuation (Rs In Cr)
ValuationValuation
Risk Free Rate 7.00% FCFFRisk Free Rate 7.00% FCFFRisk Free Rate 7.00% FCFF
Market return 13.76% Terminal ValueMarket return 13.76% Terminal Value
Market Premium 6.76% Discount RateMarket Premium 6.76% Discount RateMarket Premium 6.76% Discount Rate
Beta 0.33 PeriodBeta 0.33 PeriodBeta 0.33 Period
Ke 9.24% Discount PV of FCFFKe 9.24% Discount PV of FCFF
Kd 8.50% PV of FCFFKd 8.50% PV of FCFFKd 8.50% PV of FCFF
G 3.00% PV of TVG 3.00% PV of TV
Equity 4810.12 Enterprise valueEquity 4810.12 Enterprise valueEquity 4810.12 Enterprise value
Debt 1016.83 Net debt & Minority IncomeDebt 1016.83 Net debt & Minority Income
We 0.83 Equity ValueWe 0.83 Equity ValueWe 0.83 Equity Value
Wd 0.17 No of sharesWd 0.17 No of shares
WACC 9.11% Stock PriceWACC 9.11% Stock PriceWACC 9.11% Stock Price
Source: Perception Research & AdvisorySource: Perception Research & AdvisorySource: Perception Research & Advisory
At CMP of 142 the stock is trading at 19.52x & 17.50x its FY14At CMP of 142 the stock is trading at 19.52x & 17.50x its FY14At CMP of 142 the stock is trading at 19.52x & 17.50x its FY14
global presence, strong brand image and favorable raw materialglobal presence, strong brand image and favorable raw materialglobal presence, strong brand image and favorable raw material
attractive points of TGBL which lead the top and bottom lineattractive points of TGBL which lead the top and bottom lineattractive points of TGBL which lead the top and bottom line
9.24% and 14.54% respectively, over the period of FY13A to FY9.24% and 14.54% respectively, over the period of FY13A to FY9.24% and 14.54% respectively, over the period of FY13A to FY
valuation we arrive at the target price of 162 with a BUY ratingvaluation we arrive at the target price of 162 with a BUY ratingvaluation we arrive at the target price of 162 with a BUY rating
15%.15%.15%.
FY14E FY15E FY16E FY17E FY18EFY14E FY15E FY16E FY17E FY18E
612.89 653.80 689.19 733.36 779.57612.89 653.80 689.19 733.36 779.57612.89 653.80 689.19 733.36 779.57
13143.7813143.78
0.92 0.84 0.77 0.71 0.650.92 0.84 0.77 0.71 0.650.92 0.84 0.77 0.71 0.65
1 2 3 4 51 2 3 4 51 2 3 4 5
561.73 549.19 530.59 517.46 504.14561.73 549.19 530.59 517.46 504.14
2663.102663.102663.10
8499.978499.97
11163.0811163.0811163.08
Income 1116.80Income 1116.80
10046.2810046.2810046.28
61.8461.84
162.46162.46162.46
14E & FY15E EPS. Strategic14E & FY15E EPS. Strategic14E & FY15E EPS. Strategic
material cost are the mostmaterial cost are the mostmaterial cost are the most
line numbers at a CAGR ofline numbers at a CAGR ofline numbers at a CAGR of
FY16E. Based on our DCFFY16E. Based on our DCFFY16E. Based on our DCF
rating and a potential upside ofrating and a potential upside ofrating and a potential upside of
7. Investment Criteria & DisclaimerInvestment Criteria & DisclaimerInvestment Criteria & Disclaimer
Rating Low RiskRating Low RiskRating Low Risk
Buy Over 15 %Buy Over 15 %
Accumulate 10 % to 15 %Accumulate 10 % to 15 %Accumulate 10 % to 15 %
Hold 0% to 10 %Hold 0% to 10 %
Sell Negative Returns Negative ReturnsSell Negative Returns Negative ReturnsSell Negative Returns Negative Returns
Risk DescriptionRisk Description
Low Risk High predictabilityLow Risk High predictabilityLow Risk High predictability
Medium Risk Moderate predictabilityMedium Risk Moderate predictability
High Risk Low predictabilityHigh Risk Low predictabilityHigh Risk Low predictability
Analyst DetailsAnalyst DetailsAnalyst Details
Pushkaraj JamsandekarPushkaraj JamsandekarPushkaraj Jamsandekar
MMS - FinanceMMS - Finance
Contact - +09869139507Contact - +09869139507Contact - +09869139507
Email ID - pushkarajjamsandekar@yahoo.comEmail ID - pushkarajjamsandekar@yahoo.com
Perception Research & AdvisoryPerception Research & AdvisoryPerception Research & Advisory
DisclaimerDisclaimerDisclaimer
This document is for private circulation and information purposes only andThis document is for private circulation and information purposes only andThis document is for private circulation and information purposes only and
taxation or legal advice. Investors should seek financial advice regarding thetaxation or legal advice. Investors should seek financial advice regarding the
investment strategies discussed or recommended in this publication andinvestment strategies discussed or recommended in this publication andinvestment strategies discussed or recommended in this publication and
future prospects may not be realized. In no circumstances it be used or consideredfuture prospects may not be realized. In no circumstances it be used or considered
offer to buy or sell the securities mentioned in it. We and our affiliates, officers,offer to buy or sell the securities mentioned in it. We and our affiliates, officers,offer to buy or sell the securities mentioned in it. We and our affiliates, officers,
involved in the preparation or issuance of this material may: (a) from timeinvolved in the preparation or issuance of this material may: (a) from time
or sell the securities thereof, of company(ies) mentioned herein or (b) beor sell the securities thereof, of company(ies) mentioned herein or (b) beor sell the securities thereof, of company(ies) mentioned herein or (b) be
securities and earn brokerage or other compensation or act as a marketsecurities and earn brokerage or other compensation or act as a market
company(ies) dis-cussed herein or act as an advisor or lender or borrower to
securities and earn brokerage or other compensation or act as a market
company(ies) dis-cussed herein or act as an advisor or lender or borrower tocompany(ies) dis-cussed herein or act as an advisor or lender or borrower to
of interest with respect to any recommendation and re-lated informationof interest with respect to any recommendation and re-lated informationof interest with respect to any recommendation and re-lated information
publication may have been taken from trade and statistical services and otherpublication may have been taken from trade and statistical services and other
does not guarantee that such information is accurate or complete and it shoulddoes not guarantee that such information is accurate or complete and it shoulddoes not guarantee that such information is accurate or complete and it should
pressed reflects judgments at this date and are subject to change withoutpressed reflects judgments at this date and are subject to change without
investment can be substantial. You should carefully consider whether tradinginvestment can be substantial. You should carefully consider whether tradinginvestment can be substantial. You should carefully consider whether trading
your experience, objectives, financial resources and other relevant circumstancesyour experience, objectives, financial resources and other relevant circumstances
Perception Research & AdvisoryPerception Research & Advisory
Medium Risk High RiskMedium Risk High RiskMedium Risk High Risk
Over 20% Over 25%Over 20% Over 25%
15% to 20% 20% to 25%15% to 20% 20% to 25%15% to 20% 20% to 25%
0% to 15% 0% to 20%0% to 15% 0% to 20%
Negative Returns Negative ReturnsNegative Returns Negative ReturnsNegative Returns Negative Returns
Predictability Price VolatilityPredictability Price Volatility
High predictability Low volatilityHigh predictability Low volatilityHigh predictability Low volatility
Moderate predictability Average volatilityModerate predictability Average volatility
Low predictability High volatilityLow predictability High volatilityLow predictability High volatility
and should not be regarded as an investment,and should not be regarded as an investment,and should not be regarded as an investment,
the appropriateness of investing in any securities orthe appropriateness of investing in any securities or
and should under-stand that statements regardingand should under-stand that statements regardingand should under-stand that statements regarding
considered as an offer to sale or a solicitation of anyconsidered as an offer to sale or a solicitation of any
officers, directors and employees including personsofficers, directors and employees including personsofficers, directors and employees including persons
to time, have long or short positions in, and buyto time, have long or short positions in, and buy
engaged in any other transaction involving suchengaged in any other transaction involving suchengaged in any other transaction involving such
market maker in the financial instruments of themarket maker in the financial instruments of the
to such company or have other potential conflict
market maker in the financial instruments of the
to such company or have other potential conflictto such company or have other potential conflict
and opinions. The information contained in thisand opinions. The information contained in thisand opinions. The information contained in this
other sources, which we believe are reliable. Weother sources, which we believe are reliable. We
should not be relied upon as such. Any opinion ex-should not be relied upon as such. Any opinion ex-should not be relied upon as such. Any opinion ex-
without notice. Caution: Risk of loss in trading &without notice. Caution: Risk of loss in trading &
trading & investment is appropriate for you in light oftrading & investment is appropriate for you in light oftrading & investment is appropriate for you in light of
circumstances.circumstances.
