tata globalw2w sep 13

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Sector : Beverages

6th September 2013

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Accumulate

Analyst Name : Shivani Vivek Vishwanathan Nilesh Doshi

Tel : 022-66638956 022-66638950Email : [email protected] [email protected]

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CMP `147.15

BSE SENSEX 18980

NSE NIFTY 5593

EQUITY CAP `61.8 crsFACE VALUE `1.0

MARKET CAPITALIZATION `9093.9 crs

BSE CODE 500800

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NSE CODE TATAGLOBAL

BLOOMBERG CODE TGBL IN

EPS (FY14E) `7.6

52 WEEK HIGH/LOW `181.5/ `122.0

SHARE HOLDING PATTERN AS ON 30.06.13

PROMOTERS 35.2%

INDIAN INSTITUTIONAL & FII 37.2%

PUBLIC & OTHERS 26.7%

2Tata Global Beverages


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Investment Themewww.way2wealth.com

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Globally, the organized retail tea sector is dominated by three players Unilever,

Tata Global Beverages & Associated British Foods. Unilevers retail value sales

amounted to nearly four times those of second-placed Tata Global Beverage Ltd

(TGBL). In terms of growth rates, TGBL outperformed Unilever in 2012, growing

at13%. Changing from being an Indian tea specialist to an overall beverage

player, TGBL as a corporate expanded significantly on all fronts throughacquisition and entry into new categories. In tea, TGBL outpaced Unilever in Asia

Pacific,Australasia and North America in 2012.

Source: Euromonitor

Company 2010 2012

Unilever Group 1 1

Tata Global Beverages Ltd. 2 3

Associated British Foods Plc (ABF) 3 3

Orimi Trade OOO 4 4

Ahmad Tea London Ltd. 6 5

Ito En Ltd. 5 6

Teekanne GmbH 7 7

Guangdong Strong (Group) Co. Ltd. 15 8

Zhejiang Xiangpiaopiao Co Ltd. 17 9

Mai Komopanya OAO 9 10

.

Share of specialty tea ( i.e. green tea & herbal tea) to double over next 2-3 years. Currently specialty tea is 15% of

the total tea sales for TGBL. This is expected to double in the next 2-3 years trending on the back of demand for

healthy alternatives for consumption.

Branded coffee business in the US to grow on the back of single serve and launch of new flavors. This segment is

the fastest growing segment in the retail coffee market. Single serve account for ~24% of the retail sales as

compared to 8% five years back. Profitability to improve.

Domestic instant coffee business to gain volume traction on the back of capacity expansion. Plantations to

improve realization as sales of certified and specialty beans increase. We expect Tata Coffee to grow at 15% p.a fornext 2-3 yeas.

Water segment the new focus segment. Domestic test marketed brands, Tata Water Plus & Tata Gluco Plus, to be

launched nationally in next 2 years. Increased investment in US subsidiary Rising Beverages to gain foothold invitamanised water market in USA.



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Macro Trends : Rising awareness and health consciousness in dietary intakes

globally

Business Drivers : New product development, capacity expansion and

Investment Rationale

increasing presence in ig growt categories riven y eman or unctionafoods and beverages to aid profitable growth.

Short-term Positives : Favourable rupee movement and raw material price

movement to aid in growth and profitability.



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Rising awareness and health consciousness in dietary intakes globally in a bid to counter risingincidence of lifestyle diseases.

Investment Rationale:

Macro Drivers

Global 2008 2010 2012

Better for you Drinks $38615.3 $41478.3 $45160.5

Fortified/ FunctionalDrinks

$58714.3 $68321.3 $83559.3

Naturally Healthy Drinks $146327.9 $159315.8 $185682.9

Organic Beverages $3038.3 $3293.6 $3831.4

U.S. 2008 2010 2012

Better for you Drinks $14073.6 $14144.2 $14235.4

Fortified/ FunctionalDrinks

$19951.8 $20607.5 $24597.6

Naturally HealthyDrinks

$18822.4 $1854.1 $20879.8

Organic Beverages $807.2 $855.4 $943.4

Health & Wellness Beverage Sales ( in USD mn)

Source: Euromonitor International



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Nutraceuticals &Functional Foods/

Beverages

Nutraceuticals or functional foods are similar in appearance to conventional foods and are

consumed as part of the usual diet and may have the potential to reduce risk of cancers,coronary heart diseases, cardiovascular diseases, slow ageing effects and reduce oxidativestress.They may be anti-inflammatory, anti-microbial, and anti-diabetic and boost immunity.

Investment Rationale:

Macro Drivers



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Investment Rationale :

Business Driverswww.way2wealth.com

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New ProductDevelopment

Increasing presencein high growth

categories

Capacity/Market

Expansion

Growth



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Business Driverswww.way2wealth.comwww.technoworld.in

o New product development, capacity & market expansion coupled with increasing presence in high

growth categories driven by demand for functional foods and beverages to aid profitable growth.

Some of the initiatives & focus strategies outlined by the company for this are as follows:

TEA

COFFEE

WATER

tea portfolio

These are value addedofferings with higher realizationvs. regular tea

Currently specialty tea is~15%of the tea portfolio . Next 2-3years co. plans to take this to30%

of instant coffee by 33% to8,500 in Theni in TN, India

Increase in sale of certified &specialty coffee from plantationbusiness enabling betterrealization

Single serve volumes expansionfor Eight o Clock operations.

Tata Gluco Plus & Tata WaterPlus in the domestic market tobe taken national over the next18 month period

Himalaya Brand focus onincreasing exports

Launched Activate, a vitaminsedwater offering, in the New Yorkmarkets



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Short Term Positiveswww.way2wealth.comwww.technoworld.in

Lower cost of raw material and price interventions across geographies supporting margins

Majority of Tetley's tea requirement is sourced from Kenya. Kenyan tea prices have corrected ~25%

YOY up until July 2013. Currently ruling in a band or $2.50 to $2.70 per kg prices are expected toremain subdued due to demand slowdown from Egypt and higher crop. Kenyan production for 2013 is52.5% higher in Jan to May period at 194.9 mn kgs.

300350400

rKg

Kenyan Tea Prices

Company initiated several price increases in Tetley markets like Canada & Australia in FY13 & FY12

respectively. We believe the retail brands across the globe will take cuts less than the raw material costdrops as consumers have accepted the new normal inflationary prices.


050

100150200250

Jun-08

Jun-09

Jun-10

Jun-11

Jun-12

Jun-13

USCents

p


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Eight o Clock (EoC), is the companys branded coffee subsidiary in US. This subsidiary is showingimprovement in profitability as price of Columbian Milds Arabica coffee bean (EoCs raw material)

corrected 17.5% from FY13 average prices of 185 cent/lbs. Operating margins have improvedfrom a low of ~8% in FY12 to ~15% in FY13. We believe the ongoing correction entails further

rise in margins for EoC operations in FY14 as retailers have not taken significant price cuts ascompared to raw material price corrections.

Q1FY14 results are privy to this phenomenon as EoC margins expanded further to 21% vs. FY13

margins of 15%.


Short Term Positives

23%20%

8%

15%

0%

5%10%

15%

20%

25%

FY06 FY11 FY12 FY13

EOC Margin Profile


0

50100

150

200250300

350

2-Jul-09

2-Oct-09

2-Jan-10

2-Apr-10

2-Jul-10

2-Oct-10

2-Jan-11

2-Apr-11

2-Jul-11

2-Oct-11

2-Jan-12

2-Apr-12

2-Jul-12

2-Oct-12

2-Jan-13

2-Apr-13

2-Jul-13

Columbian Mild Prices


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The margins in the domestic operations of branded tea was also impacted by higher tea auctionprices in FY13.

The company initiated price increases in the range of 7-12% in FY13 and hence protected marginson the downside.

The current correction in Indian tea auction prices will help in improving margins to a certainextent curtailed by the rise in transport and packaging costs. We believe the price cuts to be less

than auction price correction on the back of higher demand for branded tea and to protect againstother cost escalations.


Short Term Positives

Rupee deprecation to have a favorable impact

~ 65% of the companys business comes from overseas operations.


50

70

90

110

130

150170

190

Jan-1

1

Apr-1

1

Jul-1

1

Oct-1

1

Jan-1

2

Apr-1

2

Jul-1

2

Oct-1

2

Jan-1

3

Apr-1

3

Jul-1

3

NORTH INDIA SOUTH INDIA ALL INDIA


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Company Overviewwww.way2wealth.com

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Healthy for you drink beverages company ; with presence in tea, coffee and water India accounts for ~32% of its topline, 95% of sales from black tea and 5% from green tea. With green

tea demand growing at 50% per annum it expects green tea sales to contribute 20% to sales in thenext 3-4 year

On consolidated basis, TGBL derives 70% of its revenue from tea and balance from coffee segment.Tetley, its largest brand contributes 38% to the topline, main geographies being UK and Canada. Eight

O'Clock is a gourmet whole bean coffee brand in USA. It contributes 17% to the topline.

Focus on strategic alliance:

o Starbucks : Retail Coffee Space

o

NourishCo : Water Businesso Rising Beverage : Water Business

TEA

Globally the second largest manufacturer and distributor of branded tea;

Major brands beingTata Tea, & Tetley.

COFFEE

In the coffee space , it is present in India through its plantation and instant coffee subsidiary; TataCoffee. Globally the company has presence in US through its brand acquisition of Eight o Clock

Coffee in 2006.



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Business Modelwww.way2wealth.com

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RegionRegionRegionRegion----wise Business Outlookwise Business Outlookwise Business Outlookwise Business Outlook

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Indian Operations

India Tea BrandsTata Tea,

Tetley, Kanan Devan,Chakra Gold,

& Gemini

~```2300 crs.

~```600crs

Tata Coffee A plantation &Instant coffee

Subsidiary

Water Business Himalaya,

Tata Water Plus,& Tata Gluco Plus

~```70 crs.



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Indian Branded Tea Operations

Tata Global Beverages operates five brands in India: Tata Tea, Tetley, Kanan Devan, Chakra Gold and Gemini in thebranded boxed packed tea market.

KANAN Devan, Chakra Gold and Gemini are regional brands with market leadership

Tata Tea is the market leader in the retail tea market with above 20% volume market share

BRAND FAMILYTREE

Tata Tea Premium Tata Tea GoldTata Tea Gold

DarjeelingTata Tea Life

Gemini Chakra GoldKanan DevanTata Tea Agni

Market Leaderin AndraPradesh

Fastest

Growing

Economy

brand againstthe unbranded

Leading Brand

in Kerala

Premium

Brand in AP

Brand with

18% volumeleadership



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Indian Branded Tea Operations

Growth Drivers for the Standalone Brand Business

Pricing Power :Value growth continues to aid topline growth with volumes growth in the recentpast as pipeline stock levels continue to remain low.

Migration to branded: The total retail tea market is estimated at ~`11,000 crs.; branded tea is

~55% of this growing at 20% p.a i.e., double the rate of unbranded segment.

Specialty tea growing faster: Green tea is proving to be a high growth segment in India. Greentea accounts for 5% of total market currently but is growing at 50% annually and is expected to be4 times in next 5 years. Flavored tea market in India is growing at the rate of 25% annually. TGBL

has 27% market share in the green tea segment in India under its Tetley brand.



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Indian Subsidiary:Tata Coffee (Standalone)

Last 1 years higher commodity prices and rupee depreciation favorably impacted the plantationbusiness. Arabica sales volume ( the premium quality bean) is higher by 18%. Also the higher share of

Specialty and Certified coffee has enabled the company to improve per kg realizations.

o

Plantation business to grow on the back of initiatives to improve per unit realizationthrough superior offering as well as improving yield on the back of re-plantation.

The instant coffee business to grow on the back of penetration in non Russian markets. Currently it

is 40% of the total share of instant coffee sales. The company plans to further extend it to othercountr es.

Value added instant coffee offerings, like freeze dried coffee, are rising in share of percentage to totalsales. This will continue to impact profitability positively. The share of freeze dried which wasnegligible 2-3 years ago is now 13% of instant coffee sales in the current year.

o Increase in extraction capacity of instant coffee by 33% to 8,500 in Theni in TN, India.

The newly added capacity is for the premium freeze dried segment. This expansion to

aid in volumes growth as the company was operating on 100% capacity utilization

before this.

o Standalone business gets a natural hedge between the instant coffee an plantation

business.



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Indian Business New FocusArea: Water

Equal Stake JV with Pepsi Co. in India , Nurischo, to enableTGBPL to leverage on Pepsis distribution network.

Successful test launches ofTata Water Plus and Tata Gluco Plus in Tamil Nadu in 2012,. Both these offeringsprovide functional benefits versus existing packaged drinking water options in the market.

o The company is planning a nation wide launch in next 2 years.

The company acquired Mount Everest in June 2007 to gain foothold in the niche naturally sourced packagedwater. Himalaya has since grown its brand and per unit price in a bid to become the nations largest springsourced packaged premium drinking water.

o The brand is now present in both India and Singapore. The company is focusing on export

.

increase distribution.

Indias packaged drinking water to grow at 20%+ on the back of rising issues related to water contaminationand other health related objectives.

Consumption of bottled water on a global scale has doubled over the past

10 years, according to Canadean.

In 2013 bottled water volume in Asia is expected to increase by 16%. the

region absorb every 1 in 3 litres of packaged water consumed globally

While China is a huge market and the largest consumer of packaged water

in Asia, it is fragmented. India, in fact is the country seeing the most growth

with more than 20% a year


Asia/Pacif

ic

32%

West

Europe

23%

North

America

16%

Africa/Mi

ddle East

11%

East

Europe

9%

LatinAmerica

9%

Regional Packaged Water Sales byvolume


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TETLEY The Giant Tea Bush

Tetley revenues account for ~38% of the consolidated topline.

Since its acquisition in 2000, the Tetley operations have grown at a CAGR of 3% from `1900crs to

`2794 crs.

Tetley is world second largest retail tea brand with presence in over 40 countries. The main

geographies for the Tetley brand are: UK, Canada, US and Australia.These account for ~75% of Tetleysrevenues.

The largest tea brandAccounts for ~50% of TetleyRevenues.

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Source : Company

This region is ~5% of

Tetley operations

Second largest geography forTetley at ~15%..

Australia one of the fastestgrowing regions is ~4% ofrevenues.

ROW - 25%

UK

CANADA

USA

AUSTRALIA



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Tetley UK

Tetley is the single largest brand in UK with a 27% market share followed by PG tips (Unilever)which has 24%, Typhoo (Premier Food) with 13%, Twinings (Associated British Foods) with 11% and

Yorkshire tea (Bettys and Taylors) with 6% share.

UK is a highly matured tea market with very high penetration with almost 8 in 10 drinking tea and

has dropped to 81% in 2010 from 88% in 2006

Demographics have played a key role in creating new trends for the market. Mintel research found

that while 88% of Brits over 65 years of age drink tea, only 73% of young 15-34 old adults drink tea.This sta nanc / decrease volumes have decreased while rices have increased has been offset b a

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rise in soft drink sales.

537610 667 655

0

500

1000

2006 2009 2010 2011

UK Retail Tea Market ( In UK

Pounds mns)

10905

11070

11

245

11

610

1

2350

12985

13345

0

5000

10000

15000

2006

2007

2008

2009

2010

2011

2012

UK Soft drink consumption : Value, million



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Tea drinks in UK trends are seeing a shift from traditional English breakfast tea to specialty tea.Apart from that UK, which is primarily a black tea market, is witnessing a higher growth in demand

for green tea.

The demand for specialty tea like herbal, fruit tea, decaff and other premium format like red bush

has been rising. These offerings are typically priced at 2 to 2.5 times the traditional tea henceproducing the industry value growth.

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Tetley UK

Source : Company

-1.5% 10.0% 8.0%

83.0%

16.0%

-20.0%0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

English

breakfasttea

bags

Fruitand

Herbalbags

Specialitybags

Greenteabags

Decaffeinated

bags

Growth in 2011 Sale of Various Tea Categories

Englishbreakfast

tea bags

74%

Fruit andHerbal

bags

9%

Specialitybags

8%

Green teabags

3%

Decaffeinated bags

6%

UK Tea Market Breakup - 2011 Sale(in mn)



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The UK tea market expected to grow at 1.5-2% to Euro 708mn by the end of 2016. Growth to be value driven as

volumes for black tea continue to fall but that of speciality tea keeps rising. The company plans to grow market share

through value added offerings.

Over a long term we believe that the declining traditional tea market will be offset by higher demand of specialty teai.e. green tea, ready to drink tea, herbal tea etc..

The concern of demographic demand shift will also be addressed over the next decade as the additional 65+ agegroup is expected to increase. The older demographic bent to help keep up the demand for tea.

o Tracking Tetleys innovative index in UK to tackle these trend shifts shows that the company has

over expanded its offerings and hence maintained market share in a declining environment.

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Tetley UK

o Tetley recent launches, in the premium segment such as Tetley Estate Selection and the pitch in Teapigs(a subsidiary ofTGBL, UK) are expected to drive value growth.

o We expect Tetley UK (including Teapigs) to grow ~6-8% over the next 3-4 years on the back of premium

launches and their rising contribution to topline.

Innovation TableFY10 TEA4KIDS

FY11 Tetley Green Blueberry and Lemongrass & Honey

FY12 Tetley Redbush

FY13 Tetley Estate Selection

1547.1

1476.0

1357.8

1383.4

1239.4

1390.2

1326.7

1193.8

1162.0

0.0500.01000.01500.02000.0

FY13

FY12

FY11

FY10

FY09

FY08

FY07

FY06

FY05

UK Sales ( In ```Crs.)


CAA


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CAA

CAA Canada,Australia & America account for 27.4% of the group turnover.

In particular the company has operations in USA, Canada, Australia & some of the South American

nations.

The company is present in these countries in both the tea & coffee segment through its brands Tetley

& Eight O Clock respectively. ~ 55% of this region sales is coffee & rest is tea.

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Canada,

America,

Region-wise MixAustralia

8%

South

America

2%

Region-wise Mix

Tea

Product-wise Mix

FY09 FY10 FY11 FY12 FY13

USA 1132 1303 1227 1352 1453

Canada ,South America & Australia 428 462 483 497 558

CAA 1560 1765 1710 1849 2011

(In `crs)


us ra a

27.4%

Others

72.6%

USA

72%

Canada

18%Coffee

54.6%

.

CAA t


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Brand Presence in CAA

In USA, the company is present in the brandedcoffee retail space with Eight o Clock (EoC). EoC

account for ~ 75% of the revenues out of USA.EoC is a premium whole bean coffee brand.

In Canada the company is present in the tea

se ment throu h its brand Tetle . This is second

CAA cont.

USA

BRANDS BEVERAGE CATEGORY

Eight o' Clock Coffee

Good Earth Tea

Tetley USA Tea

Activate Water

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largest geography by sales for Tetley and is a marketleader in this segment.

Australia, though this region only account for 7-8%it is the fastest growing nation. The company ispresent in this region through its brand Tetley.

Brand-wise EoC account for ~50-52% of thisregions sales and Tetley ~ 38-40%.

CANADA


Tetley Tea

Tassimo Tea

AUSTRALIA


Tetley Tea



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The Canadian tea market is estimated at $415.1 mn in 2011, it is expected to grow by 30%+ overthe next decade driven by demand of specialty tea.

This region went through distribution restructuring last year. This coupled with high competitive intensity

impacted FY13 topline growth.

o The company has initiated price increase and trade activation programs to regain lost

sales.

o The company is focusing of growing its special tea segment i.e. green tea and herbal

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. .

o The company ventured into the single serve market and tied up with Kraft Tassimo.

Australia

A highly competitive beverage market, Australia has gone from consuming tea in majority to acoffee market. TGBL has played on this and has launched Tetley Chai Latte to play on consumermind as a healthy option to a coffee latte.

This region bounced back in FY13. FY12 performance was moved due to restructuring initiativesand aggressive competitive activity.



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USA

In USA, TGBL is mainly present in coffee segment through its brand EOC. ~75% of US revenue arefrom coffee and rest from tea through Tetley and Good Earth.

The growth in this region has been under pressure due to recessionary trend and highercompetitive intensity.

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756844

910

800900

1,000

Sales (In ```crs)

6.9%

6.0%8.0%

Constant currency growth chart

59 55 60123 132 148

-100200300400500600

700

FY11 FY12 FY13

Good Earth Teas Inc.

Tetley USA Inc

EOC Holdings Inc. (Consolidated)

-10.6%

-3.7%

2.6%

-1.7%

-5.3%

-12.0%

-10.0%-8.0%-6.0%-4.0%-2.0%0.0%2.0%

4.0%

FY12 FY13

Good Earth Teas Inc.Tetley USA IncEOC Holdings Inc. (Consolidated)



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COFFEE

EOC has tied up with Green Mountain Roaster for Keuring single serves: This segment is the

fastest growing segment in the retail coffee market. Single serve account for ~24% of the retail sales ascompared to 8% five years back

EoC profitability to improve: Columbian mild coffee bean prices continue to slide. YTD prices are lowerby ~11%. We expect further expansion in margins in FY14 as pricing environment remain stable. Thoughtopline to be flat and to report only currency translation growth.

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USA

TEA

TGBL has presence in Tea segment through Tetley and its super premium brand Good Earth, though not in a

big way.

Tea is growing in demand in USA on the back of growth demand for functional drink RTD/Tea is current at

$6.7bn and is expected to grow to $8bn by 2015.

We believe the companys focus to remain on coffee in this region.

Apart from that the company latest increase in stake in Rising beverages and a successive launch of

Activate-cup twist water based vitamin drink in New York to further its step to increase its foothold

in USAs fast growing functional drink markets.


Entry into USA s Liquid


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Entry into USA s Liquid

Refreshment Beverages Marketwww.way2wealth.com

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14.3%

9.5%

5.8% 4.9%2.3%

-1.5% -1.8% -4.1%

1.0%

EnergyDrinks

RTDCoffee

BottledWater

RTDTea

SportsDrinks

ValueAdded

Water C

SDs

FruitBeverages

TotalLRB

US LRB % Change Volume by Segment

CSDs

45%

Bottled Water

32%

FruitBeverages

11%

Sports Drinks

4%

RTD Tea

4%

Energy Drinks

2%Value-Added

Water

2%RTD Coffee

0%

LRB Category Share,2012

58,714.3

68,321.3

83,559.3

19,951.8

20,607.5

24,597.6

-

50,000.0

100,000.0

2008 2010 2012

Fortified/Functional Beverage

Global (in USD mn) US (in USD mn)

Fortified/Functional Beverage - These beverages are enhancedduring the production by adding nutritional ingredients to provide

healthy benefits. For ex. Energy drinks, sports drinks and fortified water

The company recently increased stake in its US based JV

Rising Beverages to ~47%.

The product it has to offer Activate is a clear fit in theincreasing demand for functional beverages.

The brand just launched its twist cap Vitamin releaseflavored water in the East coast( New York) and plans togradually work up its distribution.

Clearly targeted for the age group between 25-28, thebrand continues to see double digit growth.

We believe this innovation will help the company create

a foothold in the growing segment of value added water.



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ROW - Rest of the World

Russia

Russia is an oversaturated blacktea market

Growth is seen in premiumvarieties of tea like fruit/herbaltea

In 2009, the company acquired

South Africa

Growing consumption of Rooibosand specialty tea in South Africa

slow decline of 2.3% in volumesseen in black tea

Acquisition of 33% stake in Joekelin 2006, which has some

Europe

Acquired Jemca brand in 2006to get the presence in CzechRepublic, where the teaconsumption is high especially

during cold seasons

In 2007, TGBL acquired Vitaxand Flosana brand in Poland toet the further ran e of fruit

largest in Russia in tea and coffeein the economy segment)

In 2012, they acquired SuntyCoHolding, (the owner of Grandbrand) with the remaining 49%

of share along with EBRD toexpand its sale in Russian market

economy brand under itsoperation

In April 2013, production capacityincreased by 80% to 20,226 kg oftea per day , thereby increasing thereach of Joekel to supply 95% ofhousehold tea in S.A. Toplineexpected to double here.

Its focus is now to tap the Africanmarket and to increase the exportto rest of the continent.

and herbal product apart fromTetley.

Tetley brand gaining traction inFrance.

Vitax expand offerings toincrease presence in growthsegments.


Risks &Val ations


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VALUATIONS

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Risks & Valuations

RISKS

Volatility in tea & coffee prices.

Vagaries of weather.

Volatility in currency rates.

Any sudden fall in demand from developed nations due to worsening of economic conditions.

Globally we believe TGBLs churn in product portfolio aided by product innovation to enablegrowth is in high demand product categories such as specialty tea & water segments. The fallingcommodity prices coupled with a weaker rupee make both topline and bottom-line look

attractive. A leadership position in the Indian packaged tea market, No. 2 position in the global

tea market, the business of brands and improving operating margins could augur well for thecompany. At the CMP of`147.15/- TGBL is trading at 19.4x FY14E EPS of`7.6. We believethe cost saving as well as the product innovation pipeline will support growth overthe medium to longer term and hence we recommend investors to ACCUMULATE

the stock.32Tata Global Beverages


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Consolidated Financials

In `Crs..

FY11A FY12A FY13A FY14E

Net Sales 6003.2 6640.0 7351.0 7768.1

Total Expenditure 5395.0 6017.0 6582.5 6887.8

Operating Profit 608.1 623.1 768.5 880.3

OPM 10.1% 9.4% 10.5% 11.2%

Other Income 97.19 94.52 86.01 92

Interest 121.03 70.35 84.44 92

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. . .

PBT 484.9 551.1 664.9 770.3Exceptional Items 9.5 22.5 -28.2 0.0

Tax Expenses 202.3 141.7 164.1 208.0

PAT 292.1 431.9 472.7 562.3

PATM 4.9% 6.5% 6.4% 7.2%

Share of Profit/(Loss) in Associate Company 20.3 -15.1 -27.7 -15.0

Minority Interest 58.0 60.7 72.3 78.0

PAT after Minority 254.3 356.2 372.7 469.3

Basic EPS 4.1 5.8 6.0 7.6


C lid d Fi i l


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In `Crs..

FY11A FY12A FY13A FY14E

Share Capital 61.7 61.8 61.8 61.8

Reserves and Surplus 3895.4 4503.9 4748.3 5086.7

Total Shareholder's Fund 3957.1 4565.8 4810.1 5148.6

Minority Interest 1108.1 1065.9 813.9 901.9

Non-Current Liabilities 1038.9 1134.8 1022.2 1082.0Current Liabilities 1660.4 1512.3 2147.6 1870.4

Sources of Funds 7764.5 8278.8 8793.9 9002.9

NON-CURRENT ASSETS 4377.8 4887.9 5184.7 5334.5

Consolidated Financialswww.way2wealth.com

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. . . .

Goodwill on Consolidation 3038.1 3468.7 3598.1 3673.1Non-Current Investments 480.0 473.5 576.0 619.0

Long-Term Loans and Advances 91.1 88.3 83.6 106.0

Other Non-Current Assets 4.2 33.3 0.0 5.0

CURRENT ASSETS 3386.6 3390.9 3609.2 3668.4

Current Investments 106.5 93.0 1.9 2.0

Inventories 1069.7 1160.7 1382.9 1422.1

Trade Receivables 573.3 651.8 712.9 794.0

Cash and Cash Equivalents 997.3 736.2 697.7 672.7

Short-Term Loans and Advances 626.4 732.1 792.4 752.5

Other Current Assets 13.5 17.1 21.3 25.0

Uses of Funds 7764.5 8278.8 8793.9 9002.9


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Consolidated Financials

Ratio Analysis FY11A FY12A FY13A FY14E

Profitability Ratios

EBITDA(%) 10.1% 9.4% 10.5% 11.2%EBIT(%) 8.5% 7.9% 9.0% 9.9%PBT(%) 8.1% 8.3% 9.0% 9.9%

PAT(%) 4.2% 5.4% 5.1% 6.0%Tax Rate(%) 40.9% 24.7% 25.8% 27.0%ROCE(%) 9.9% 9.2% 11.3% 12.1%RONW(%) 6.4% 7.8% 7.7% 9.1%Valuation Ratios*

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EPS4.1 5.8 6.0 7.6P/E

35.7 25.5 24.4 19.4

CEPS5.7 7.3 7.7 9.4

BV64.1 73.8 77.8 83.3

DPS2.0 2.2 2.2 2.2

EV/EBITDA16.6 16.4 13.2 11.6

Debt/Networth 25.8% 19.5% 21.1% 18.0%Growth Ratios

Net Sales 3.4% 10.6% 10.7% 5.7%PBIDT 13.4% 2.5% 23.3% 14.6%PAT -34.8% 40.0% 4.6% 25.9%

Net Sales to Net FA (x times) 7.9 8.1 7.9 8.3



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Team

Analyst Designation Sector Email Telephone

Nilesh Doshi President (Research) [email protected] +9122-6633 8950

Debashish Mazumdar Sr. Research Analyst Information Technology, Media [email protected] +9122-6663 8952

Shivani V. Vishwananthan Sr. Research Analyst FMCG [email protected] +9122-6663 8956

Nisha Harchekar Sr. Research Analyst Chemicals [email protected] +9122-6146 2952

Debashish Mazumdar Sr. Research Anal st Information Technolo , Media debashish.mazumdar tssl.in +9122-6663 8952

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Institutional Sales Designation Email Telephone

Shilpa Venugopal Senior Manager [email protected] +9122-6164 2969

Institutional Dealing Designation Email Telephone

Ajay Prabhudesai Assistant Vice President [email protected] +9122-4027 8930

Vipul Mehta Manager [email protected] +9122-4027 8931

Gaurav Shah Manager [email protected] +9122-4027 8933



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DISCLAIMER: This information & opinions in this report have been prepared by TECHNO SHARES & STOCKS LTD & WAY2WEALTH BROKERS PVT. LTD.The report & the information contained herein are strictly confidential and meant solely for the authorized recipient and may be restricted by law or regulationin certain countries. This report is for information purposes only for the authorized reader and does not construe to be any investment, legal or taxation advice.

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involved in the preparation/issuance of this report may have (a) from time to time, any interest or positions (buy/sell etc.) financial (including inderivatives/commodities market) or otherwise in the companies/securities covered/mentioned in this report and may have acted upon the information &/or (b)been engaged in any other transaction, commercial or otherwise, in respect of the companies/securities covered in this report, like earning brokerage,

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