Tata Tea
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Value buys - The intrinsic value is close to market price
Forum Discription: Companies that sit on a large amount of cash or investments or land bank plays or having high dividend yield can be categorised under this segment. These companies have lower downside risks
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1366
Printed Date: 28/Apr/2024 at 12:19pm
Topic: Tata Tea
Posted By: sajanvm
Subject: Tata Tea
Date Posted: 15/Nov/2007 at 7:25pm
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Tata Tea at current market price of Rs750 : Market cap: 4500 Cr
Consolidated debt: 4500 Cr
EV : 9000 Cr
Consolidated sales: 4000 Cr.
As was widely reported, Tata Tea sold their Glaceu stake to Coca Cola for $1B . This will accrue to the company in Nov and will be a tax free gain.
If you see half year consolidated results, interest payments were about 160 Cr. Annualizing this - 320 Cr potential interest payment for the year.
From the proceeds of the Glaceu sale, they could potentially pay down most of the debt. Lets assume that 2/3rd of debt is paid off. This will reduce interest payment for the year by around 200 Cr.
Since equity is around 6 Cr shares, EPS could jump by a phenomenal Rs 33 !
On a EV/Sales basis, Tata Tea is quoting at around 1 time sales. I think its v cheap for a branded play that generated 20% OPM.
Your views are welcome.
Rgds
Sajan ------------- Sajan |
Replies:
Posted By: hkumar
Date Posted: 15/Nov/2007 at 8:04pm
Are you saying $1B is the gain ? Or it is the total transaction amount, what is the gain value then?
Looks a compelling reason to buy, the promoters stake has also gone up by 7% in last 1 year. The company is performing consistently though the OPM is quite inconsistent (may be due to seasonal nature of business) and the company thrives on extraordinary transactions, almost every quarter.
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Posted By: sajanvm
Date Posted: 15/Nov/2007 at 8:37pm
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$1B is the value of the stake. Profit is $435 million. ------------- Sajan |
Posted By: basant
Date Posted: 15/Nov/2007 at 9:28pm
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I think that by getting out of plantatins Tata tea has also become a branded player froma commoditized one. It does look cheap nut unfortunately cheap and deep value plays do not thrive in a bull market that seems to focus on just one thing "growth".It is that biasness of the market which allows investiors to pick up stable companies like this at thse valuations.
Over a period of time Tata tea is a stable 15%-20% grower. A cousin of mine attended the AGM and indicated that Ratan Tata said that he has big plans for Tata Tea.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Vivek Sukhani
Date Posted: 15/Nov/2007 at 9:32pm
| A slight correction in your calculations. Kindly add the tax impact of the interest savings. there will no be no tax shelter and hence the PAT will actually increase by 2/3 of 200 crores i.e. 133 crores. ( Assuming tax rate @ 33.33 p.c.) . So, the resulting EPS increment on account of interest savings will be 22 rupees. |
Posted By: sajanvm
Date Posted: 15/Nov/2007 at 10:33pm
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Basant - when you say that today'a market is biased towards growth and this allows us to pick businesses such as this at cheap valuations, it does ring a bell.
Was it not the master who said "In the short run, the market is a voting machine. In the long run it is a weighing machine". Vivek - thanks for the correction. If I give a conservative 10 multiple to that 'extra' 22 EPS, then we can look at a rs 220 jump...forget re-rating or anything else. That was my logic fo Tata Tea.
rgds ------------- Sajan |
Posted By: ndzapak
Date Posted: 15/Nov/2007 at 11:33pm
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We also discussed Tata Tea here
http://www.theequitydesk.com/forum/forum_posts.asp?TID=1039 - http://www.theequitydesk.com/forum/forum_posts.asp?TID=1039
------------- the Equitydesk is the best |
Posted By: kumarrvq
Date Posted: 15/Nov/2007 at 11:45pm
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Tata tea can be one of the value buy at this level, but when we look at the current bull run, we can clearly see that it is momentum stocks or any company with major capex plan are moving up, this happens when we are in the last leg of any bull run, so why don't we wait for sometime let market go for major correction (when momentum stocks falls, other will also fall) then buy this value stocks. ------------- Thanks & Regards, Harry |
Posted By: basant
Date Posted: 15/Nov/2007 at 7:00am
So he did. But I was just trying to explain the current market psychology. It does seem heavily biased towards growth Surprisingly people are not looking whether such growth is sustainable or would come at the cost of increased capex etc. See the power sector. Nowhere in the world do power companies command these sort of valuations but India is different or so it is being said.
While we can argue that times are scary or that everyone has gone crazy the point is that it becomes very difficult to put a lid on what is termed as "fair" valuation.
Prices can go higher or lower, but depending on our style we should choose stocks that should over period of time guarantee a recovery of capital - at least.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: sajanvm
Date Posted: 15/Nov/2007 at 8:22am
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Basant - fully agree with you. We all have to choose what style/philosophy we are comfortable with.
I for one am uncomfortable with today's obsession with reported EPS without any regard for free cash flow. As we all know, reported EPS really means nothing to a business owner.
Anyways, this bull market is really testing my temperament ! Its a real test of who I am !
Rgds
Sajan ------------- Sajan |
Posted By: smartcat
Date Posted: 15/Nov/2007 at 11:19am
Apparently, in 1950s - 60s, power utility companies were trading at a comparitively high P/E in the USA - because that's when industrial growth was zooming there. The economy simply needed more power plants.
Similar story seems to be unfolding here.
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Posted By: kg
Date Posted: 14/Dec/2007 at 12:06pm
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stock has climbed up rapidly from 800 to 925 ... ------------- Lets rock |
Posted By: msjala
Date Posted: 19/Jul/2008 at 1:13pm
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Enam and other Brokerage houses have downgraded Tata Tea. To quote them, "Core growth remains unattractive, EBIT growth at 7% CAGR over 2 years: The sharp increase in tea (Kenyan prices ½ 37% in 2MFY09) and coffee bean prices ( 27% in 2MFY09) is likely to impact margins, despite the rational price hikes effected across categories." Also, during the mayhem during Februaury, when other Tea Stocks went thru the roof, Tata Tea showed modest momentum. Is Tata Tea still a good bet? ------------- - Thanks, Jala. |
Posted By: Vivek Sukhani
Date Posted: 20/Jul/2008 at 8:41pm
I avoid getting into what other people are saying for a company, but I believe Tata Tea shall be a stock worth accumulating. After Nirma, this is perhaps one of the cheapest FMCG companies my screen is showing..... ------------- Jai Guru!!! |
Posted By: prasham77
Date Posted: 22/Aug/2008 at 8:42pm
Tata Tea -- available at 2.8 PE , why?  Is something wrong or FMCG sentiment keeping it low. Any idea for outlook in coming years. Anybody having any latest reports?
------------- Let it be simple |
Posted By: paragdesai
Date Posted: 22/Aug/2008 at 9:38pm
There is Extra ordinary gain on sell of Investment worth Rs. 1607 Cr.
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Posted By: kstreet
Date Posted: 20/Sep/2008 at 8:13pm
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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 |
Posted By: Hitesh Shah
Date Posted: 01/Dec/2008 at 12:34pm
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 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 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 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. ------------- |
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http://www.business-standard.com/india/news/rich-flavour/13/02/341735/bsheadline.php - More 
http://www.business-standard.com/india/common/specials_new.php - More 
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.Posted By: Vivek Sukhani
Date Posted: 01/Dec/2008 at 3:30pm
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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!!! |
Posted By: Vivek Sukhani
Date Posted: 29/Jan/2009 at 11:43am
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http://www.bseindia.com/qresann/news.asp?newsid=B3B3598D-15B4-43A3-AB82-75112AA8557E&flag=I&type=A&scrip_CD=500800 - 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!!! |
Posted By: murthis
Date Posted: 28/Dec/2009 at 5:00pm
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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." ------------- |
Posted By: equitykid
Date Posted: 21/Apr/2010 at 10:02pm
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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.
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Posted By: karthik34
Date Posted: 30/Apr/2010 at 5:00pm
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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. ........................................................................................................... http://www.phonebook.com - Phonebook http://divorcesupportandadvice.com/copingwithdivorce - coping with divorce |
Posted By: samirarora
Date Posted: 30/Apr/2010 at 5:46pm
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Tata tea announces a 1:10 stock split, dates and details to be announced later, subject to various approvals.. ------------- |
Posted By: samirarora
Date Posted: 06/May/2010 at 3:06pm
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SIGN OF THINGS TO COME.... WATCH THIS STOCK CLOSELY!
Tata Tea Ltd has informed BSE that the Board of Directors the Company has approved a change in the name of the Company from "Tata Tea Ltd" to "Tata Global Beverages Ltd, subject to the approval of the Shareholders and the approval of the Central Government. The approval of the shareholders is proposed to be sought by way of postal ballot in accordance with the provisions of Section 192A of the Companies Act, 1956.
TATA GLOBAL BEVERAGES LTD.
seems the management are doing a JAGO RE to themselves!!!
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Posted By: samirarora
Date Posted: 06/May/2010 at 3:14pm
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I get the feeling, that public holding in this stock is very low , kind of judging by lack of interest in the stock.. should i buy more .. mmmm.. maybe if there is any correction. i will buy more after all. ------------- |
Posted By: master
Date Posted: 06/May/2010 at 10:34pm
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Wider product bouquet, Stronger distribution, Stock split to FV of Re 1 and Change of name - from all this, i feel Tatas are going to position it as a true FMCG play. Let's hope it gets that kind of market re-rating as well. ------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: stocksavy1
Date Posted: 18/May/2010 at 6:34pm
| If I am not mistaken, the PE for this is still around 2.5, please correct me if i am wrong. I think from all that it is said above, considering that it is an FMCG and with such a big brand backing this is a good stock to accumulate. |
Posted By: paps3535
Date Posted: 27/Jun/2011 at 8:34pm
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Tata Global Beverages Ltd has signed MOU with Kerala Ayurveda Limited, with the intention of exploring the formation of a Joint Venture for focussing on development of a range of Beverage and Food products based on proven Ayurvedic recipes, actives and formulations for the Global market where there is world - wide recognition of the benefits of Ayurveda for good health and wellness. Definitive agreements are expected to be finalized over the next few months .The Holding Company has entered into a 50: 50 Joint Venture with Pepsico India Holding Pvt Ltd and formed a jointly controlled entity named NourishCo Beverages Ltd to operate in the area of non-carbonated ready-to-drink beverages focused on health and enhanced wellness. The mandate of the Joint Venture is to develop its business both within India and internationally. With regards to valuation, this company has a marketcap of less than Rs 7,000 crore. The sale of the company is almost about Rs 6,500-7,000 crore which means it is available at one time of sales. If you look at other FMCG companies including HLL, Nestle, ITC etc these companies are trading at between 4-7 times of their sales. ------------- Everything has good end.if it is not good,then it is not the end. |
Posted By: Ravenrage
Date Posted: 27/Jun/2011 at 8:46pm
| Britannia is undervalued too , i believe . |
Posted By: paps3535
Date Posted: 27/Jun/2011 at 9:04pm
but seems to be expensive when compared to Tata global...
..Also I think tata global will definitely emerge as winner when moat is considered...
disclaimer:I have no position either in Tata global or in britannia.but looking to enter Tata global.
------------- Everything has good end.if it is not good,then it is not the end. |
Posted By: chriskb
Date Posted: 29/Jun/2011 at 8:38am
| P/B for Tata Global Beverages is about 3 or less, not 14.5 (refer to consolidated balance sheet). |
Posted By: paps3535
Date Posted: 30/Jun/2011 at 12:30pm
don't we need to adjust it after split?.. ------------- Everything has good end.if it is not good,then it is not the end. |
Posted By: chriskb
Date Posted: 30/Jun/2011 at 4:49pm
| Yes, after split - P/B is about 3 or less. |
Posted By: paps3535
Date Posted: 30/Jun/2011 at 8:11pm
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then Tata Tea, Tetley, Eight o'clock,Himalayan Water etc brands under its belt,with P/B about 3..doesn't qualify it as a screaming buy? Or am I missing something? Views invited.
------------- Everything has good end.if it is not good,then it is not the end. |
Posted By: Ravenrage
Date Posted: 30/Jun/2011 at 9:01pm
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What are the negatives ? Instead of trying to find positives , I think we need to think of the negatives equally , if not more . No negatives - that's impossible .
I believe contradictions are more important before an investing decision is made , not confirmations . |
Posted By: barla
Date Posted: 01/Jul/2011 at 1:39pm
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The main negative for the Tata Tea is that the tea industry is not going to see real growth anymore.
Tea consumption is stagnating. And health concisuous indians are moving away from regular tea.
The brands that Tata tea has is valuable as are its real estate. There is a representative of Indian Hotels on the board of Consolidate coffee. Estate tourism.
Things like this has some promise.
But per se tea is dead.
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Posted By: paps3535
Date Posted: 01/Jul/2011 at 1:57pm
good to see you back,barla.  ------------- Everything has good end.if it is not good,then it is not the end. |
Posted By: barla
Date Posted: 01/Jul/2011 at 2:49pm
Thanks. I keep coming and dropping out.
By the way in Tea one of the better stocks is Goodricke.
A pre independence company with strong british links even today. Ethical manageemnt.
about 3.75% dividend yield. With almost 35% of their gardens now with tea saplings that are immature. These saplings will start producing tea in the next 3 to 7 years.
But then all depends on the price realisations at that point of time.
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