Active TopicsActive Topics  Display List of Forum MembersMemberlist  CalendarCalendar  Search The ForumSearch  HelpHelp
  RegisterRegister  LoginLogin

Value buys - The intrinsic value is close to market price
 The Equity Desk Forum :Investment Ideas - Creating winning portfolios! :Value buys - The intrinsic value is close to market price
Message Icon Topic: Tata Tea Post Reply Post New Topic
<< Prev Page  of 5 Next >>
Author Message
kstreet
Newbie
Newbie
Avatar

Joined: 30/May/2008
Location: India
Online Status: Offline
Posts: 22
Quote kstreet Replybullet Posted: 20/Sep/2008 at 8:13pm

Coca Cola the largest beverage company is traded at 4 times sales in 2008.

 
Do we value branded companies like Tata Tea also the same way?
 
If yes. Then Tata Tea could be valued at 16,000 cr.
 
A good value buy.
 
Nestle is also value at 4 times sales.
 
Do clarify on this...
 
Tata Tea has a mission to grow 5 times in 5 years


Edited by kstreet - 20/Sep/2008 at 8:15pm
IP IP Logged
Hitesh Shah
Senior Member
Senior Member


Joined: 12/Oct/2008
Online Status: Offline
Posts: 3656
Quote Hitesh Shah Replybullet Posted: 01/Dec/2008 at 12:34pm
Rich flavour - Business Standard
PENNY WISE
Sarath Chelluri / Mumbai December 1, 2008, 20:24 IST

Tata Tea has come a long way from being a large domestic plantation company into the world’s second largest branded tea player supported by various tea brands (own and acquired). While these cater to nearly all segments, cumulatively they have also helped the company sustain leadership position in key global markets.

In the domestic market, too, the company’s strategy of focusing on volume growth has helped it attain volume-based leadership position. Notably, its moves in the last two years, to enter or expand into other beverage segments should see it emerge as a global beverage company in years to come. Also, the company has significant amount of cash and investments and an annual consolidated cash flow of over Rs 500 crore, which it can use to materialise its growth plans.

Tea - a lion’s share
Tea segment contributes around three-fourths of the consolidated sales of the company. The domestic tea segment, which accounts for 25 per cent of consolidated sales (or a third of total tea sales), owns brands like “Tata Tea Premium”, “Tata Tea Agni”, “Tata Tea Gold”, and “Tata Tea Life”, coupled with regional brands like Chakra Gold, Kanan Devan and Gemini is present across all segments in the value chain.

This business, which grew by around 8 per cent in FY08, has seen growth rates perk up to 13 per cent in the first half of FY09 driven by nearly 9 per cent growth in volumes across all brands. To an extent, uptrading by customers, from the unorganised segment into the branded segment, has also helped in the form of higher sales growth in Tata Tea Agni (an economy brand).

While the consolidated Tea sales were not impressive (grew by only 3 per cent) in FY08, these have also been looking up off late. The slow growth earlier can attributed to black tea major Tetley’s dominance in the overall revenues (around two-thirds of consolidated Tata Tea revenues) which caters to mature markets in UK and the Americas.

However, the focus on ‘health & wellness’ platform diversifying away from the ageing black tea through aggressive promotion of new-age green, fruit & herbal teas, iced ready-to-drink teas and exotic specialty tea would drive the future growth in these markets.

While Tetley holds stranglehold in the developed markets, the expansion of Tata Tea in other large markets (including Russia and China) on the back of existing brands (Tetley and Tata Tea), will drive future growth. Likewise, the company may also suitably deploy its international brands in the domestic market, which would help it garner greater share in the tea market.

Coffee and water
The coffee segment accounts for one fifth of the total revenues and has grown by more than 30 per cent in FY08, with strong numbers from the instant coffee segment. While majority of the coffee revenues come from exports and instant coffee contributes around 60 per cent of the total revenues earned by the coffee business, the company is gradually enhancing its presence in the branded segment as well.
 

PERFECT BREW
Rs crore FY08 FY 09 (E) FY 10 (E)
Net Sales 4,366.0 4,795.0 5,025.0
Adjusted PAT * 281.0 369.0 417.0
EPS (Rs) 45.4 59.5 67.3
P/E (x) 11.6 8.9 7.9
E: Analyst estimates
* Excluding extraordinary items

The company’s acquisition (through Tata Coffee) of US-based Eight O’clock Coffee (among top three brands) in 2006 has helped gain a strong presence in that market, and is reflecting positively on the consolidated entity.

For now and in the branded coffee market, the company is also focussing on Russia and other CIS countries, which are among major markets, accounting for around three-fifths of global instant coffee sales. Any action on the proposed acquisition or joint-venture in Russia will further consolidate the company’s position in that region.

On the domestic front, brands like Coorg, Tata Café and Tata Kapi face stiff competition from players like Nestle and Bru. The company is looking towards pure coffee sales through its brand Coorg coffee in the major markets of Andhra Pradesh and Tamil Nadu, as a growth driver.

Although Tata Coffee sold off its stake (around 34 per cent) in retail coffee-chain, Barista, the company plans to enter this segment once the non-compete agreement with Barista expires in the next year. These plans would garner superior revenues and enhance the company’s brand visibility in the domestic market.

Although very small, the ‘mineral water’ segment is estimated to have promising prospects. Tata Tea’s acquisition of Mount Everest Mineral Water (around 33 per cent) allows it to use their “Himalayan” brand. This brand, which is primarily present in the institutional segment, is now being expanded to the retail segment as well. ‘Natural mineral’ water carries a premium price tag abroad for its health benefits.

The proposed introduction of “Himalayan” in Europe and the US, by leveraging the distribution network of Tetley and Eight O Clock, will be beneficial as there is demand for mineral water in these countries.

Investment rationale
With Tata Tea preparing to launch several tea variants, energy drinks along with promotion of existing tea brands as well as mineral water in India and abroad, expect the company’s consolidated advertising expenditure to remain unchanged (at an average around 20 per cent of sales) in the future. In the near-term though, operating margins are likely to remain under pressure due to high tea prices, even as the company has undertaken selective price hikes in the previous quarters.

With regards to growth, domestically, factors like low per capita tea consumption, rising in disposable incomes and increasing awareness of health benefits of tea augur well for the tea industry. Tata Tea, which is a leader in the business, should grow ahead of the industry, given the initiatives undertaken as well as appetite for growth. Globally, expansion of product offerings including herbal tea and green teas and foray in newer markets in West Asia, Asia Pacific and Africa will further help Tata Tea sustain growth at the consolidated level in the future.

With low debt on its books and high amount of cash and investments (worth about Rs 100 per share), Tata Tea is also comfortably placed to grow inorganically. At Rs 528, the stock is trading at around 8 times its estimated FY10 earnings and is expected to deliver 18-20 per cent returns annually, in the next two years.




Edited by Hitesh Shah - 01/Dec/2008 at 12:40pm
IP IP Logged
Vivek Sukhani
Senior Member
Senior Member
Avatar

Joined: 23/Jul/2006
Online Status: Offline
Posts: 6675
Quote Vivek Sukhani Replybullet Posted: 01/Dec/2008 at 3:30pm
Tata Tea is no longer a tea or beverages company....its a funds company. I am expecting Tata Tea to earn huge amount of interest income.
It shall be a good bet in the long term. Also, look at the list of its investment.....Tata Cofee, Rallis India, tata chem........all very wonderful bets. I dont see anything negative in this company, expect for the management which can make all type of decisions........
 
Have the management of Lever in place of Tatas, and the stock will set new records......
Jai Guru!!!
IP IP Logged
Vivek Sukhani
Senior Member
Senior Member
Avatar

Joined: 23/Jul/2006
Online Status: Offline
Posts: 6675
Quote Vivek Sukhani Replybullet Posted: 29/Jan/2009 at 11:43am

http://www.bseindia.com/qresann/news.asp?newsid=B3B3598D-15B4-43A3-AB82-75112AA8557E&flag=I&type=A&scrip_CD=500800

when all the companies are busy in making losses on the exchange front, this company has produced a blinder of a gain. the consolidated EPS is 110 coins a ticket in a quarter, primarily because of the gain accruing from restatement of short term dollar assets it holds.
 
Thats why I think its better to hold both tata tea and tata chem in a portfolio to neutralise this kind of a volatility.....both these companies carry a very wonderful future.
Jai Guru!!!
IP IP Logged
murthis
Newbie
Newbie


Joined: 28/Dec/2009
Location: India
Online Status: Offline
Posts: 3
Quote murthis Replybullet Posted: 28/Dec/2009 at 5:00pm
Taking as an instance the case of Sourav Ganguly v. Tata Tea ltd. wherein Sourav Ganguly who returned form Lords after scoring magnificent centuries found himself extremely disturbed when he realized that Tata Tea Ltd., in which he was employed as a manager, was promoting it's 1 kilo tea packet by offering the consumers a chance to congratulate Sourav through a postcard which was there inside each packet of tea. In a way indirectly what the company intended was to promote the sale of its tea packet in the Indian market where Sourav had earned considerable amount of popularity. The court ruled in favour of Sourav by accepting that his fame and popularity is his intellectual property."



Edited by basant - 28/Dec/2009 at 8:10pm
IP IP Logged
equitykid
Newbie
Newbie


Joined: 21/Oct/2007
Location: India
Online Status: Offline
Posts: 2
Quote equitykid Replybullet Posted: 21/Apr/2010 at 10:02pm
Very happy to see that a discussion is opened up on Tata Tea.
I'm just appearing in this forum for second time, first time with Tinplate Co.
 
Tata Tea looks to be a company in transformation from a tea co. or a branded beverage co. to a Wellness Co.   More focus is on products like Green Tea, Iced Tea, etc in International Mkt.  They are also taking the Himalayan brand global.  Reaped success in launching a coffee brand of reputation ahead of P&G and Starbucks in U S under Good Earth Brand. Look to position it as a greener brand.   REcently launched a non-carbonated fruit-tea-ginseng based drink Tion here.  Pricing and theme looks attractive - opinion i received my many friends and relatives.
 
From valuation pt. of view, the stock at just above 1 time sales and around 11 PE looks quite attractive. Dividend of Rs. 18 per share or 2% div. yield at a pay-out of just 20% of Fy 2009 PBT. Cons. net debt at Rs. 1,400 cr. Maintains good pricing power on Tea, Coffee and Water brands as is reflected in its latest quarterly results when Tea prices are at its peak. It has got well established brands in tea and coffee biz.  Himalayan too getting added as a unique brand (it's a premium brand of choice).
 
Corporate Actions Expected in 2010 - Name change (reflect a wellness co.), merger of coffee and water biz and thrust on expanding the portfolio in good for you beverages.  Not too late, market may capture that Tata Tea is transforming itself to a Wellness Co.  New initiatives and enhancing product portfolio may lead to re-rating to 1.5 times sales or 14-15 P/E mutliples, which looks decend for this Co.  A successful transformation to a Wellness Co. can work out wonders.
 
 
IP IP Logged
karthik34
Newbie
Newbie


Joined: 30/Apr/2010
Online Status: Offline
Posts: 3
Quote karthik34 Replybullet Posted: 30/Apr/2010 at 5:00pm
Today, Tata Tea Limited (TTL) is the world's 2nd largest manufacturer and distributor of value-added tea. The company is owned by the Tata Group in India and trades under 2 major brands: Tata Tea and Tata Tetley. Among these 2 brands owned by Tata Tea Company, Tata Tea is the largest brand in India whereas Tata Tetley is claimed to be the largest tea company in United Kingdom and Canada and also the 2nd largest in the United States in terms of volume. Tata Coffee is also a subsidiary of Tata Tea Company and is considerably popular in USA. Apart from USA, Tata Tea has gained significant popularity in Switzerland, Austria, Germany, Italy, Taiwan, Singapore, Japan, and Australia for its instant tea-making products and services.
...........................................................................................................
Phonebook
coping with divorce

IP IP Logged
samirarora
Senior Member
Senior Member
Avatar

Joined: 11/Jan/2009
Location: India
Online Status: Offline
Posts: 1037
Quote samirarora Replybullet Posted: 30/Apr/2010 at 5:46pm
Tata tea announces a 1:10 stock split, dates and details to be announced later, subject to various approvals..
IP IP Logged
<< Prev Page  of 5 Next >>
Post Reply Post New Topic
Printable version Printable version

Forum Jump
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot delete your posts in this forum
You cannot edit your posts in this forum
You cannot create polls in this forum
You cannot vote in polls in this forum



This page was generated in 0.109 seconds.
Bookmark this Page

Join Theequitydesk.com Today!

It’s easy to Join and it’s free.

Here's why members would love to be a part of theequitydesk.com

  • Equity Desk focuses on why to buy shares and invest in share rather than what to buy.
  • Live discussion forum wherein members can discuss the current Indian share Market trend, BSE Sensex or the Nifty Index.
  • Have huge cache of information on Indian and World Share Market.
  • Analysis of Indian stock market, Global events, Investing insights, portfolio management strategies and thoughts,
  • Meet investors from round the globe check their investing strategies share experiences and learn for their experiences on stocks and shares, evaluate opinions on investing in India.

Register now while it’s free!

Already a member? Close this window and log in.

Join Us           Close