Tata Global Beverages has risen steadily in the last five years, doubling investor wealth. The stock rose from Rs 150 in 2014 to Rs 306 currently, gaining 103 percent in five years. To put in perspective, an investment of Rs one lakh in 2014 would have turned to Rs 2,03,000 today.
The stock hit its 52-week high of Rs 322.70 per share on BSE on November 1, 2019, and a 52-week low of Rs 177.50 on February 11, 2019. Its current market capitalisation stands over Rs 19,000 crore.
The FMCG sector, on a whole, has been a good investment for long-term investors. The Nifty FMCG index itself has risen over 54 percent in the last 5 years with only 2 of its constituents (Emami and ITC) in red for this period.
Tata Global Beverages' peers have also performed well during this period. HUL rose 170 percent, Marico was up 123 percent, Dabur gained 101 percent, United Breweries added 59 percent, and United Spirits advanced 13 percent.
However, the stock has outperformed all its peers in the last 1 year and in 2019 despite the consumer demand slowdown. It has risen 42 percent in the last 1 year and 40 percent in 2019.
Among peers, HUL has gained only 20 percent in 1 year, Dabur is up 16 percent and Marico added 1 percent, while United Breweries and United Spirits have given negative returns in this period, down 6 percent and 3 percent, respectively.
In YTD as well, Marico, United Breweries and United Spirits were in red, down between 3-10 percent. HUL was the only gainer up 1 percent.
In a recent report, Motilal Oswal said that Tata Global Beverages' India tea business is its breadwinner and is one of the strongest tea franchisees in India, a leading market player and amongst the only two brands with a national presence. It's India tea business’ revenue/EBITDA has clocked 10 percent/13 percent CAGR over the past decade, impressive for a category where the penetration is more than 90 percent.
It added, "We believe that a business-specific earnings approach appropriately captures the company’s potential. Further, the company offers much potential as it is concentrating on the high return on invested capital India business once again. The company has already exited/plans to exit loss-making businesses and focus on cost control and scalable business opportunities." The brokerage has an upside on 16 percent for the stock for a 12-month basis.
Tata Global Beverages (TGB) is a natural beverage company with an interest in tea, coffee, and water. It is the second-largest branded tea player globally with operations spanning over 40 countries. Branded products represent 90 percent of its consolidated sales, of this, tea accounts for 80 percent.
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First Published: IST