Positive on Tata Global Beverages: Rajesh Jain

ajesh Jain, Market Strategist, speaks to ET Now about Tata Global Beverages.

What are your reasons for liking Tata Global Beverages your target on it and why do you like it?

Tata Global Beverages is a very strong play on the tea sector. We discuss this a couple of weeks ago on the same show when I had given a set of 4 food processing stocks, 3 in the multinational space and Tata Global was a fourth one. Tata Global currently enjoys the benefit of improving tea prices thanks to the crop problems that have besieged the East India plantations. So that should really help in better realisations and Tata Tea being an integrated tea company would be able to lock into some stock profits and hence there is an opportunistic profit gain for the company there. In terms of the overall business model what is exciting is what it will be doing with Himalaya since it has acquired Mount Everest and then it has this tie up with Pepsico for affordable water as well as ready to drink health beverages. Recently they have announced the foray into foods again on the wellness platform and it would be interesting what are the kind of launches to be seen there but both the affordable water, the Himalaya drinking water as well as the food segment will take some time to acquire critical mass and start contributing to the top line and the bottom line.

I think the exciting potential in Tata Global Beverages apart from tea, team mind you was 85% of the company even today and it has a lot of sales overseas. It recently has decided to garner greater than 10% share in Sri Lankan and Pakistan markets. It already straddles a lot of the western markets. The upside in Tata Global Beverages or Tata Tea as it was known has to be the coffee business. Today it is a commodity supplier but there is tremendous upside from branding out there. We already have two very large brands in the country and I do not think there is a room for a local brand to really shake the packing order there but I think in the export market Tata Tea is already working very aggressively and I think that can give you over a 2 to 3 year time frame the big kicker in the stock. In the near term 12 to 18 months I hope the stock should be able to give a 150 which is a fair return from the current levels.

Source: ET