tata global beverages ltd

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. - BUYCMP - INR 142.00 TP - INR 162.00 Risk CMP - INR 142.00 TP - INR 162.00 Risk CMP - INR 142.00 TP - INR 162.00 Risk

TH - 12 Months Up Side - 15.00 % Return TH - 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 rationale�Investment rationale�Investment 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). With this strongand Vitax in Poland (16% share of fruit tea market). With this strongand Vitax in Poland (16% share of fruit tea market). With this strong

we believe that TGBL would continue to grow its tea revenueswe believe that TGBL would continue to grow its tea revenueswe believe that TGBL would continue to grow its tea revenues

further.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

BUYBUYBUYBUYBUYRisk - 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 20425period of 12 months

the stock is trading at Sensex 20425the stock is trading at Sensex 20425

Equity Shares (Cr) 61.84the stock is trading at

respectively. StrategicEquity Shares (Cr) 61.84

Face Value (INR) 1.00respectively. Strategic

material cost are the mostFace Value (INR) 1.00

material cost are the mostFace Value (INR) 1.00

Avg Vol (‘000) 2899material cost are the most

numbers at a CAGR ofAvg Vol (‘000) 2899

numbers at a CAGR ofAvg Vol (‘000) 2899

52-wk HI/LO (INR) 174.35/122.00 numbers at a CAGR of

to FY16E. we rate this52-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 FY16Ecquisitions and partnerships with Starbucks & PepsiCo

Y/E Mar (Cr) FY13A FY14E FY15E FY16E

Net Sales 7351 8033 8779 9596cquisitions and partnerships with Starbucks & PepsiCo

strength of TGBL whichNet Sales 7351 8033 8779 9596

strength of TGBL whichNet Sales 7351 8033 8779 9596

GP 2793 3019 3301 3612strength of TGBL which

grew at moderate paceGP 2793 3019 3301 3612

grew at moderate paceGP 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 2.45Acquisitions & partnerships with

company as it can marketDPS 2.15 2.33 2.43 2.45

company as it can marketDPS 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)

strong s globe presence,FII 19.13% 17.77% 17.85% 20.61%

strong s globe presence,FII 19.13% 17.77% 17.85% 20.61%

DII 19.17% 18.46% 18.50% 16.89%strong s globe presence,

revenues at the same paceDII 19.17% 18.46% 18.50% 16.89%

Other 29.43% 31.37% 31.45% 29.68%revenues at the same pace Other 29.43% 31.37% 31.45% 29.68%revenues at the same pace 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

[email protected] its margins. [email protected]

Perception Research & Advisorysupport its margins.

Perception Research & AdvisoryPerception Research & Advisory

�Company background�Company background�Company 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

coffee and water. The Company operates in three segments,coffee and water. The Company operates in three segments,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 pattern�Share 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%

Source: Perception researchSource: Perception researchSource: Perception research

ventures and associates, isventures and associates, isventures and associates, is

production and distribution of tea,production and distribution of tea,production and distribution of tea,

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%

Q2FY1435.55% 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%

�Investment rationale�Investment 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 revenue Exhibit 01: Growth in Tea revenue Exhibit 01: Growth in Tea revenue

6851 12%8000

62856851

11%12%8000

52905766

62856851

11%10%

47675290

57669% 9% 9%

10%6000

47675290 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 FY16ETea GrowthTea Growth

Source: Perception researchSource: Perception research

Exhibit 03: Growth in paper and other revenue Exhibit 03: Growth in paper and other revenue

50%120100

50%120

90 95 100

42%

50%

100

120

8086 90 95

42% 40%10080

8642% 40%

80

100

30%80

30%60

80

20%60

20%40

20%40

8%10%20 8%

5% 5% 5%

10%205% 5% 5%

0%0 0%0

FY12A FY13A FY14E FY15E FY16EFY12A FY13A FY14E FY15E FY16E

Paper & Other Growth

Source: Perception research

Paper & Other Growth


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 revenue Exhibit 02: Growth in Coffee revenue Exhibit 02: Growth in Coffee revenue

25%30002472

25%3000

20432247

2472

20% 20%2500

18572043

224720% 20%2500

17061857

2043

15%2000 1706

15%1500

200015%

1500

9%10% 10% 10% 10%

1000

1500

9%10% 10% 10% 10%

1000

5%500

1000

5%500

0%0 0%0


Coffee GrowthCoffee Growth


Exhibit 04:NIM - Growth in Total revenue Exhibit 04:NIM - Growth in Total revenue

12%12000 12%12000

87819597

12%

10000

12000

80348781

9597

11% 11%11%10000

66337352

80348781

11% 11%11%

8000

10000

6633735211% 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


Total Revenue Growth

Source: Perception research

Total Revenue Growth


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

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PricePrice


Exhibit 06: Change in Kenya tea prices Exhibit 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

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-4.00%

-2.00%

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-4.00% Oct

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-8.00%

-6.00%

-8.00%

-10.00%

-8.00%

-10.00%

-12.00%-12.00%


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

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Ma

r-1

3

Ap

r-1

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Jun

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�Financials & projections�Financials & projections

Exhibit 07: Tata global beverages ltd. Valuation (Rs In Cr)Exhibit 07: Tata global beverages ltd. Valuation (Rs In Cr)Exhibit 07: Tata global beverages ltd. Valuation (Rs In Cr)

Profit And Loss A/C FY12A FY13A FY14E FY15E FY16E Ratio And ValuationProfit And Loss A/C FY12A FY13A FY14E FY15E FY16E Ratio And Valuation

Net Sales 6631 7351 8033 8779 9596 Value Per ShareNet Sales 6631 7351 8033 8779 9596 Value Per ShareNet Sales 6631 7351 8033 8779 9596 Value Per Share

Cost of sales 4218 4452 4901 5356 5854 EPSCost of sales 4218 4452 4901 5356 5854 EPS

Depreciation 96 105 113 122 129 DPSDepreciation 96 105 113 122 129 DPS

Gross Profit 2317 2793 3019 3301 3612 CEPSGross Profit 2317 2793 3019 3301 3612 CEPSGross Profit 2317 2793 3019 3301 3612 CEPS

Ad, S&D Expenses 1768 2130 2250 2459 2687 BV/ShAd, S&D Expenses 1768 2130 2250 2459 2687 BV/Sh

Operating profit 549 663 770 843 925 Dividend Pay Out Ratio(%)Operating profit 549 663 770 843 925 Dividend Pay Out Ratio(%)Operating profit 549 663 770 843 925 Dividend Pay Out Ratio(%)

Other income 95 58 61 64 67Other income 95 58 61 64 67Other income 95 58 61 64 67

Net interest 70 84 92 99 106 Performance RatiosNet interest 70 84 92 99 106 Performance Ratios

Pre tax Income 574 637 738 808 886 ROA (%)Pre tax Income 574 637 738 808 886 ROA (%)Pre tax Income 574 637 738 808 886 ROA (%)

Income tax 142 164 188 206 226 ROE (%)Income tax 142 164 188 206 226 ROE (%)

Post Tax Income 432 473 550 602 660 Asset Turnover(x)Post Tax Income 432 473 550 602 660 Asset Turnover(x)Post Tax Income 432 473 550 602 660 Asset Turnover(x)

Net Profit 356 373 450 502 560 Inventory Turnover(x)Net Profit 356 373 450 502 560 Inventory Turnover(x)Net Profit 356 373 450 502 560 Inventory Turnover(x)

Debtors Turnover(x)Debtors Turnover(x)

Balance Sheet FY12A FY13A FY14E FY15E FY16E Efficiency RatiosBalance Sheet FY12A FY13A FY14E FY15E FY16E Efficiency RatiosBalance Sheet FY12A FY13A FY14E FY15E FY16E Efficiency Ratios

Net Fixed Assets 4244 4435 4759 5101 5376 Receivable daysNet Fixed Assets 4244 4435 4759 5101 5376 Receivable days

WIP 49 91 50 50 50 Inventory DaysWIP 49 91 50 50 50 Inventory DaysWIP 49 91 50 50 50 Inventory Days

Investments 567 578 607 637 669 Payable daysInvestments 567 578 607 637 669 Payable days

Current assetsCurrent assetsCurrent assets

Inventories 1161 1383 1409 1546 1689 MarginsInventories 1161 1383 1409 1546 1689 MarginsInventories 1161 1383 1409 1546 1689 Margins

Sundry Debtors 652 713 759 829 906 Gross Profit Margin (%)Sundry Debtors 652 713 759 829 906 Gross Profit Margin (%)

Cash and Bank 736 698 709 646 713 Operating Profit Margin (%)Cash and Bank 736 698 709 646 713 Operating Profit Margin (%)Cash and Bank 736 698 709 646 713 Operating Profit Margin (%)

Other Current Assets 0 0 0 0 0 EBITDA Margin(%)Other Current Assets 0 0 0 0 0 EBITDA Margin(%)Other Current Assets 0 0 0 0 0 EBITDA Margin(%)

Loans and Advances 871 897 916 1005 1098 Pre-Tax Profit Margin (%)Loans and Advances 871 897 916 1005 1098 Pre-Tax Profit Margin (%)

Current Liabilities Net Profit Margin (%)Current Liabilities Net Profit Margin (%)Current Liabilities Net Profit Margin (%)

Creditors 1311 1640 1686 1843 2014Creditors 1311 1640 1686 1843 2014

Other 448 513 531 580 634 Valuation RatioOther 448 513 531 580 634 Valuation RatioOther 448 513 531 580 634 Valuation Ratio

Net Current Assets 1661 1538 1576 1602 1758 P/E (x)Net Current Assets 1661 1538 1576 1602 1758 P/E (x)Net Current Assets 1661 1538 1576 1602 1758 P/E (x)

Long Term debt 888 1017 1088 1164 1246 P/BV (x)Long Term debt 888 1017 1088 1164 1246 P/BV (x)

Defer Tax 1066 814 814 814 814 EV/Net Sales(x)Defer Tax 1066 814 814 814 814 EV/Net Sales(x)Defer Tax 1066 814 814 814 814 EV/Net Sales(x)

Net Worth 4566 4810 5089 5413 5794 EV/EBITDA(x)Net Worth 4566 4810 5089 5413 5794 EV/EBITDA(x)

Share Capital 62 62 62 62 62 EV/EBIT(x)Share Capital 62 62 62 62 62 EV/EBIT(x)

Total Reserves 4504 4748 5028 5351 5732 EV/CE(x)Total Reserves 4504 4748 5028 5351 5732 EV/CE(x)Total Reserves 4504 4748 5028 5351 5732 EV/CE(x)

Net Worth 4566 4810 5089 5413 5794 M Cap / SalesNet Worth 4566 4810 5089 5413 5794 M Cap / Sales


Ratio And Valuation FY12A FY13A FY14E FY15E FY16ERatio And Valuation FY12A FY13A FY14E FY15E FY16E

Value Per ShareValue Per ShareValue Per Share

5.76 6.03 7.27 8.11 9.065.76 6.03 7.27 8.11 9.06

2.15 2.15 2.33 2.43 2.452.15 2.15 2.33 2.43 2.45

7.31 7.73 9.10 10.08 11.157.31 7.73 9.10 10.08 11.157.31 7.73 9.10 10.08 11.15

BV/Sh 73.83 77.78 82.30 87.53 93.69BV/Sh 73.83 77.78 82.30 87.53 93.69

Dividend Pay Out Ratio(%)Dividend Pay Out Ratio(%)Dividend Pay Out Ratio(%)

Performance RatiosPerformance Ratios

ROA (%) 6.03% 6.24% 7.10% 7.49% 7.85%ROA (%) 6.03% 6.24% 7.10% 7.49% 7.85%ROA (%) 6.03% 6.24% 7.10% 7.49% 7.85%

ROE (%) 7.80% 7.75% 8.84% 9.27% 9.67%ROE (%) 7.80% 7.75% 8.84% 9.27% 9.67%

Asset Turnover(x) 1.12 1.23 1.27 1.31 1.35Asset Turnover(x) 1.12 1.23 1.27 1.31 1.35Asset Turnover(x) 1.12 1.23 1.27 1.31 1.35

Inventory Turnover(x) 3.63 3.22 3.48 3.47 3.47Inventory Turnover(x) 3.63 3.22 3.48 3.47 3.47Inventory Turnover(x) 3.63 3.22 3.48 3.47 3.47

Debtors Turnover(x) 10.17 10.31 10.59 10.59 10.59Debtors Turnover(x) 10.17 10.31 10.59 10.59 10.59

Efficiency RatiosEfficiency RatiosEfficiency Ratios

Receivable days 35 36 36 36 36Receivable days 35 36 36 36 36

Inventory Days 102 107 110 110 110Inventory Days 102 107 110 110 110Inventory Days 102 107 110 110 110

Payable days 82 77 80 80 80Payable days 82 77 80 80 80

MarginsMarginsMargins

Gross Profit Margin (%) 34.9% 38.0% 37.6% 37.6% 37.6%Gross Profit Margin (%) 34.9% 38.0% 37.6% 37.6% 37.6%

Operating Profit Margin (%) 8.3% 9.0% 9.6% 9.6% 9.6%Operating Profit Margin (%) 8.3% 9.0% 9.6% 9.6% 9.6%Operating Profit Margin (%) 8.3% 9.0% 9.6% 9.6% 9.6%

EBITDA Margin(%) 11.2% 11.2% 11.7% 11.7% 11.7%EBITDA Margin(%) 11.2% 11.2% 11.7% 11.7% 11.7%EBITDA Margin(%) 11.2% 11.2% 11.7% 11.7% 11.7%

Tax Profit Margin (%) 8.7% 8.7% 9.2% 9.2% 9.2%Tax Profit Margin (%) 8.7% 8.7% 9.2% 9.2% 9.2%

Net Profit Margin (%) 5.4% 5.1% 5.6% 5.7% 5.8%Net Profit Margin (%) 5.4% 5.1% 5.6% 5.7% 5.8%Net Profit Margin (%) 5.4% 5.1% 5.6% 5.7% 5.8%

Valuation RatioValuation RatioValuation Ratio

P/E (x) 27.76 23.62 19.52 17.50 15.68P/E (x) 27.76 23.62 19.52 17.50 15.68P/E (x) 27.76 23.62 19.52 17.50 15.68

P/BV (x) 2.17 1.83 1.73 1.62 1.52P/BV (x) 2.17 1.83 1.73 1.62 1.52

EV/Net Sales(x) 1.68 0.40 1.09 1.51 1.24EV/Net Sales(x) 1.68 0.40 1.09 1.51 1.24EV/Net Sales(x) 1.68 0.40 1.09 1.51 1.24

EV/EBITDA(x) 5.23 3.09 10.18 13.56 11.04EV/EBITDA(x) 5.23 3.09 10.18 13.56 11.04

EV/EBIT(x) 5.58 3.58 12.05 15.59 12.65EV/EBIT(x) 5.58 3.58 12.05 15.59 12.65

EV/CE(x) 1.94 0.66 2.36 3.79 2.88EV/CE(x) 1.94 0.66 2.36 3.79 2.88EV/CE(x) 1.94 0.66 2.36 3.79 2.88

M Cap / Sales 1.20 0.12 0.93 1.49 1.20M Cap / Sales 1.20 0.12 0.93 1.49 1.20

�Valuation�Valuation

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


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

Investment Criteria & Disclaimer Investment Criteria & Disclaimer Investment Criteria & Disclaimer

Rating Low Risk Rating Low Risk Rating 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 Description Risk 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 - +09869139507 Contact - +09869139507 Contact - +09869139507

Email ID - [email protected] ID - [email protected]

Perception Research & AdvisoryPerception Research & AdvisoryPerception Research & Advisory

Disclaimer Disclaimer Disclaimer

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.

tata global beverages ltd

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