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TGBL, 6th February, 2013
TGBL, 6th February, 2013
February 4, 2013
NEUTRAL
CMP Target Price
Investment Period
% yoy 6.1 8.9 26bp 15.3 2QFY13 1,843 143 7.8 130 % qoq 3.2 32.8 222bp (29.1)
`145 -
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code FMCG 8,973 (100) 0.9 182/100 520,560 1 19,751 5,987 TGBL.BO TGBL@IN
For 3QFY2013, Tata Global Beverages (TGBL) posted a 15.3% yoy growth in its bottom-line aided by superior operating performance. We maintain our Neutral view on the stock. Key highlights: TGBL posted a 6.1% yoy growth in top-line to `1,902cr aided by favourable foreign currency translation impact, and was in-line with our estimates. The tea business posted a 9.3% yoy growth in top-line to `1,421cr, aided by a strong performance, both in India as well as in other markets such as Canada and Australia. The coffee business posted a marginal 1.2% yoy decline in its sales to `481cr. Despite a lower top-line, the coffee business posted a 20.1% yoy growth in its profits, aided by lower raw material costs and lower expenditure on advertisement. TGBLs OPM rose by 26bp on a yoy basis to 10% aided by selective price hikes and 238bp yoy decline in advertisement expenditure/sales ratio. Outlook and valuation: TGBL derives ~65% of its revenue from overseas operations. While the company is expected to perform well in the South Asian, Canada and Australian markets, the prolonged slowdown in Europe is a concern. Over FY2012-14, we expect the company to post a CAGR of 10.2% and 22.7% in its top-line and bottom-line, respectively. At the current market price, the stock is trading at 17.9x FY2014E earnings. We maintain our Neutral view on the stock.
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 35.2 19.1 20.8 24.9
3m 5.3 (8.5)
FY2011 5,982 3.4 245 (37.3) 9.8 4.0 36.6 2.3 6.5 7.7 1.4 14.4
FY2012 6,585 10.1 333 36.0 8.8 5.4 27.0 2.0 7.9 7.1 1.3 15.0
FY2013E 7,272 10.4 424 27.3 9.1 6.9 21.2 1.9 8.9 8.0 1.2 12.7
FY2014E 7,999 10.0 502 18.4 9.5 8.1 17.9 1.7 9.8 9.0 1.0 10.9
V Srinivasan
022-39357800 v.srinivasan@angelbroking.com
3QFY13 1,902 930 48.9 188 9.9 595 31.3 1,712 189.7 10.0 23.8 25 31 172 12 160 8.4 67 41.9 18.0 5.3 92 5 62 1.5
2QFY13 1,793 871 48.6 176 9.8 572 31.9 1,619 174.1 9.7 23.2 24 30 157 16 141 7.8 59 42.0 18.4 0.9 80 4 62 1.3
% chg (yoy) 6.1 6.8 6.2 4.0 5.8 8.9 26bp 2.9 3.4 4.4 9.8 13.8 13.3
2QFY13 1,843 937 50.8 177 9.6 586 31.8 1,700 142.8 7.8 11.0 25 52 159 11 148 8.0 20 13.5 20.7 11.7
% chg (qoq) 3.2 (0.7) (3.8) 6.0 2.7 1.4 (1.7) 0.7 32.8 222bp 117.4 (1.9) (41.2) 8.1 8.1 4.7 235.8
9MFY2013 5,459 2,732 50.0 538 9.9 1,686 30.9 4,956 503 9.2 56 75 112 485 28.7 456 8.4 136 29.9 53.2 10.5
9MFY2012 4,861 2,486 51.1 491 10.1 1,484 30.5 4,461 400 8.2 56 71 112 384 (62.0) 447 9.2 113 25.2 36.5 4.6 240 5 62 3.9
% chg 12.3 9.9 9.5 13.6 11.1 25.8 99bp (0.2) 5.3 0.5 26.0 2.1 20.8
15.3
130 7 62
(29.1)
306 6 62
27.4
15.3
2.1
(29.1)
4.9
27.4
February 4, 2013
USA: TGBLs operations in USA, carried out through subsidiary Eight O Clock Coffee reported a 5.1% yoy decline in sales to `352cr. However, more importantly, the profitability improved considerably due to favourable green coffee pricing. Australia: In the Australian market, there was an all-round improvement in
performance. The growth came from key consumers and new products launched. Canada: Six new variants were launched in the Canadian market. The Tata Tea brand increased retail listing. Single serve brewing machines, in collaboration with Tassimo, were launched during the quarter.
Europe: In Great Britain, the overall tea category has declined in the past twelve
months. However, the company has posted a strong growth in the upcoming green tea segment. Tea Pigs too grew by a healthy 45%. Countries in the rest of Europe such as Russia, Poland, France and Czech Republic have not delivered due to the recessionary trend in those regions.
(` cr)
1,374
1,448
February 4, 2013
3QFY12
371 142 407 237 496 8 1,661 139 1 1,801
%chg yoy
(5.1) 27.5 (3.4) (13.9) 18.5 62.5 4.2 20.1 1600.0 6.3
2QFY13
393 154 403 174 516 10 1,650 191 20 1,861
%chg qoq
(10.4) 17.5 -2.5 17.2 14.0 30.0 4.9 (12.6) (15.0) 2.9
9MFY13
1,091 423 1,172 553 1,641 36 4,916 531 54 5,501
9MFY12
1,017 342 1,040 572 1,445 19 4,435 425 37 4,897
% chg
7.3 23.7 12.7 -3.3 13.6 89.5 10.8 24.9 45.9 12.3
3QFY13
3QFY12
%chg yoy
2QFY13
%chg qoq
9MFY13
9MFY12
% chg
OPM at 10.3%
Although tea prices were ruling higher during the quarter, selective price hikes taken by the company and decline in prices of coffee resulted in only a marginal 43bp yoy decline in gross margins. The companys advertising expenses as a percentage of sales fell by 238bp during the quarter, thereby aiding marginal expansion in OPM. The OPM for the quarter stood at 10.3%. For 3QFY2013, TGBL posted a 15.3% yoy growth in its consolidated net profit aided by an 8.9% growth in its operating profit.
February 4, 2013
Investment rationale
Growth opportunity: TGBL holds a strong growth potential with increasing consumption of healthy beverages in India and globally. Acquisitions and strategic partnerships with global beverage giants like PepsiCo and Starbucks offer a huge market potential for TGBL, as it can develop and market products in local as well as global markets. The TGBL Starbucks JV recently inaugurated the first store of Starbucks Coffee Tata Alliance in Mumbai. The JV plans to scale up its operations quickly going ahead. Through its JV with Pepsico, TGBL has also entered the water business. It has launched two brands Tata Gluco Plus and Tata Water Plus in select cities in India. The initial response to the water brands has been encouraging with Tata Water Plus becoming the largest selling bottled water company in Chennai. Focus on branded products to lead to healthy margins: TGBL has shifted its focus from plantation activities to branded beverages. In the long run this is expected to lead to rationalization in its operating cost structure leading to healthy operating margins. While TGBLs focus on volume growth remains intact, selective price increases and stable ad spends will further aid in margin improvement.
February 4, 2013
Source: Bloomberg, Angel Research; Note: Blue line represents 3-yr average
CMP (`)
4,633 471 1,342 133 748 3,813 466 307 224 4,723 145
TP (`)
584 -
Upside (%)
24 -
CAGR # Sales
17.6 15.3 15.4 16.6 26.3 16.1 15.5 17.4 18.6 16.0 10.2
FY14E
31.5 19.1 29.8 24.4 27.6 32.2 27.5 27.7 27.6 33.2 17.9
FY14E
3.2 0.7 4.9 3.2 3.4 4.0 3.3 6.8 2.4 4.4 1.0
FY14E
35.0 42.7 97.0 44.0 26.3 31.9 75.8 35.1 22.6 60.3 9.8
EPS
19.4 25.6 17.1 21.6 29.9 18.3 19.3 18.7 28.1 16.1 18.8
Source: Company, Angel research; Note: # Denotes CAGR over FY2012-14E, *December Year Ending.
Company background
TGBL is a global beverage company headquartered in London. The company has a strong portfolio of global and regional brands such as Tata Tea, Tetley, Eight OClock Coffee, Good Earth, Jemca, Grand Vitax and Himalayan. During the past decade, TGBL has made acquisitions in various countries in the tea, coffee, water and other beverages categories. Tea constitutes more than 70% of the companys total turnover; coffee constitutes an ~19% share; and the rest is accounted by other activities. About 65% of the companys sales are from outside India from countries such as the US, UK, Czech Republic and Poland.
February 4, 2013
FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E 4,848 4,848 12.5 4,224 1,753 880 554 1,036 624 12.2 12.9 99 526 13.1 10.8 210 215 40.6 531 (74.6) 725 1,256 424 79.9 107 25 156 (25) 701 14.5 (0.4) (0.4) 0.0 5,783 5,783 19.3 5,269 2,310 1,317 611 1,031 514 (17.7) 8.9 103 411 (21.9) 7.1 149 379 59.2 641 20.7 8 649 248 38.6 393 33 36 390 399 6.9 6.3 6.3 0.0 5,982 5,982 3.4 5,395 2,928 1,013 615 840 587 14.4 9.8 99 488 18.8 8.2 121 118 24.3 485 (24.3) 10 494 202 41.7 283 20 58 245 (37) 254 4.3 4.0 4.0 (37.4) 6,585 6,585 10.1 6,009 3,323 1,100 675 911 576 (1.9) 8.8 96 480 (1.6) 7.3 70 140 25.5 550 13.5 23 573 142 25.7 409 (15) 61 333 36 355 5.4 5.4 5.4 35.7 7,272 7,272 10.4 6,610 3,672 1,163 771 1,004 662 14.8 9.1 106 555 15.6 7.6 68 146 23.1 634 15.1 634 171 27.0 463 30 69 424 27 424 5.8 6.9 6.9 27.3 7,998 7,998 10.0 7,239 4,016 1,280 848 1,096 759 14.7 9.5 117 642 15.6 8.0 61 143 19.8 725 14.4 725 171 23.6 554 30 82 501 18 501 6.3 8.1 8.1 18.4
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
February 4, 2013
FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E 62 3,591 3,653 1,022 2,431 48 7,154 1,442 707 735 63 3,027 351 4,587 1,089 2,303 1,194 1,617 2,970 8 7,154 62 3,662 3,723 1,057 1,797 75 6,652 1,470 752 718 47 2,929 519 3,998 1,904 653 1,441 1,560 2,438 6,652 62 3,895 3,957 1,108 1,041 64 88 164 6,423 1,538 842 697 44 3,062 591 91 3,280 997 717 1,565 1,342 1,938 6,423 62 4,504 4,566 1,066 916 66 174 156 6,943 1,731 956 775 49 3,469 600 86 3,300 736 820 1,744 1,336 1,964 6,943 62 4,770 4,832 1,066 816 66 174 156 7,109 1,899 1,063 836 47 3,469 694 86 3,448 743 848 1,857 1,471 1,978 7,109 62 5,116 5,177 1,066 716 66 174 156 7,354 2,089 1,180 909 52 3,469 718 86 3,675 739 873 2,063 1,556 2,119 7,354
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
February 4, 2013
FY2009 FY2010 FY2011 FY2012 531 99 381 154 424 (1,605) (864) (68) 1,155 1,087 (178) 125 154 (457) (234) 1,323 1,089 641 103 42 91 248 (326) 303 (89) 1,472 1,384 (634) 146 91 (871) 815 1,089 1,904 485 99 (284) 45 202 (125) 18 (85) 5 (81) (63) (591) 145 45 (845) (907) 1,904 997 550 96 (69) 2 142 (232) 205 (198) (10) (208) 0.1 (134) 123 2 (259) (261) 997 736
FY2013E 634 106 (92) (20) 171 (39) 418 (166) (93) (259) (100) 119 (20) (199) (40) 736 743
FY2014E 725 117 (248) (24) 171 (38) 361 (195) (25) (219) (100) 119 (24) (195) (53) 743 739
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
February 4, 2013
Key Ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Returns (%) RoCE Angel ROIC (Pre-tax) RoE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days)
previous year numbers
FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E (363.3) 43.5 2.5 1.2 2.1 15.9 1.4 (0.4) (0.4) 3.3 1.8 58.5 7.4 3.0 3.5 49 34 88 95 22.9 17.8 2.4 1.4 1.4 16.2 1.3 6.3 6.3 8.1 2.0 59.6 6.2 10.8 4.1 53 31 83 76 36.6 25.3 2.3 1.4 1.4 14.4 1.3 4.0 4.0 5.7 2.0 63.4 7.7 6.5 4.0 61 33 74 45 27.0 19.9 2.0 1.5 1.3 15.0 1.3 5.4 5.4 7.3 2.1 73.1 7.1 7.9 3.9 62 34 59 60 21.2 16.9 1.9 1.5 1.2 12.7 1.2 6.9 6.9 8.6 2.2 77.5 8.0 8.9 3.9 60 34 57 62 17.9 14.5 1.7 1.5 1.0 10.9 1.2 8.1 8.1 10.0 2.2 83.0 9.0 9.8 3.9 60 35 56 60
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
February 4, 2013
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Website: www.angelbroking.com
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Ratings (Returns):
February 4, 2013
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