1. Date - 26th November, 2013
Tata global beverages ltd. - BUY
CMP - INR 142.00
TH - 12 Months
TP - INR 162.00
Up Side - 15.00 %
Risk - Medium
Return - Medium “Over 15 % “
We initiate investment note on Tata global beverages ltd. (Tata Global) as a BUY
with a DCF valuation based Price target of 162 over a period of 12 months
representing a potential upside of 15%. At CMP of 142, the stock is trading at
19.52x and 17.50x its estimated earnings for FY14 and FY15, respectively. Strategic
global presence, strong brand image and favorable raw material cost are the most
attractive points of TGBL which lead the top and bottom line numbers at a CAGR of
9.24% and 14.54% respectively, over the period of FY13A to FY16E. we rate this
stock as a potential investment opportunity.
Investment rationale
Strong brand equity with acquisitions and partnerships with Starbucks & PepsiCo
cquisitions
Strong brand image of “Tea products” are the major strength of TGBL which
contributed 72% of revenue in top line number. Tea revenue grew at moderate pace
over last five years at a CAGR of 8.85%, instead of an expected CAGR growth of 9.00%
respectively over the period of FY13A to FY18E. TGBL has substantial growth
opportunity not only in India but across the globe. Acquisitions & partnerships with
Starbucks & Pepsico offer a huge market potential for the company as it can market
its products in local & global markets.
Impressive global presence helps to continue the growth at same pace further
Healthy growth has been added by its global presence in tea segment, in India (22%
value share of Tata Tea), Canada (Tetley), UK (27% value share of Tetley), acquisition
of leading brands across the globe, Joekels in South Africa (third largest player), Good
Earth in US (21% volume share), Jemca in Czech Republic (which is the market leader)
and Vitax in Poland (16% share of fruit tea market). With this strong s globe presence,
we believe that TGBL would continue to grow its tea revenues at the same pace
further.
Favorable fall down in Kenya tea prices
Majority of Tetley Teas requirement is sourced from Kenya. Since Kenyan tea prices
are fall down by 24.86% on a yoy basis till Oct 2013 it will help TGBL lower its raw
material cost across geographies which would also help support its margins.
Market Data
Sensex
Equity Shares (Cr)
Face Value (INR)
Avg Vol (‘000)
52-wk HI/LO (INR)
Free Float (Cr)
O/S shares (Cr)
Market Cap (Cr)
Y/E Mar (Cr)
Net Sales
GP
OP
PBT
Net Profit
EPS
DPS
ROE (%)
ROA (%)
P/E (X)
P/BV (X)
Holding
Promoter
FII
DII
Other
20425
61.84
1.00
2899
174.35/122.00
40.20
61.84
8781
FY13A
7351
2793
663
473
373
6.03
2.15
7.75%
6.24%
23.62
1.83
FY14E
8033
3019
770
550
450
7.27
2.33
8.84%
7.10%
19.52
1.73
FY15E
8779
3301
843
602
502
8.11
2.43
9.27%
7.49%
17.5
1.62
FY16E
9596
3612
925
660
560
9.06
2.45
9.67%
7.85%
15.68
1.52
Q3FY13
35.20%
19.13%
19.17%
29.43%
Q4FY13
35.20%
17.77%
18.46%
31.37%
Q1FY14
35.20%
17.85%
18.50%
31.45%
Q2FY14
35.10%
20.61%
16.89%
29.68%
Analyst Details
Pushkaraj Jamsandekar
9869139507
pushkarajjamsandekar@yahoo.com
Perception Research & Advisory

2. Company background
Tata Global Beverages Limited, through its subsidiaries, joint ventures and associates, is
a global beverages company engaged in the trading, production and distribution of tea,
coffee and water. The Company operates in three segments, Tea, which includes
cultivation and manufacture of black tea and instant tea, tea buying/blending and sale of
tea in bulk or value added form; Coffee and Other Produce, which includes cultivation of
coffee, pepper and other plantation crops and conversion of coffee into products, such
as roast and ground coffee and instant coffee, and Others, which includes sale of natural
mineral water, other minor crops, curing operations of coffee and trading of items
required for coffee plantations.
Share holding pattern
Y/E March 31
(A) Promoter Group
Bodies Corporate
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI
Financial Institutions / Banks
Government State / Central
Insurance Companies
Foreign Institutional Investors
(2) Non-Institutions
Bodies Corporate
(3) Individuals
Individual holding up to Rs. 1 lakh
Individual holding excess of Rs. 1 lakh
Others
Total
Source: Perception research
FY13Q2
35.57%
35.57%
FY13Q3
35.57%
35.57%
FY13Q4
35.55%
35.55%
FY14Q1
35.54%
35.54%
FY14Q2
35.61%
35.61%
% QOQ
0.20%
0.20%
% SPLY
0.11%
0.11%
0.40%
0.39%
0.37%
0.37%
0.38%
3.62%
-5.23%
4.86%
4.22%
4.29%
4.64%
4.28%
-7.76% -11.93%
13.14% 10.93% 10.69% 10.52%
9.64%
-8.37% -26.64%
0.03%
0.03%
0.03%
0.03%
0.08% 166.67% 166.67%
5.43%
4.18%
3.62%
3.50%
3.14% -10.29% -42.17%
16.69% 19.33% 17.94% 18.03% 20.91% 15.97% 25.28%
0.02%
0.03%
0.03%
0.03%
0.02% -23.76%
-4.94%
2.43%
2.96%
2.83%
3.03%
2.31% -23.76%
-4.94%
0.22%
0.23%
0.25%
0.25%
0.24%
-2.79%
9.93%
20.25% 20.98% 22.83% 22.47% 21.88%
-2.63%
8.05%
0.84%
0.96%
1.06%
1.01%
0.98%
-2.97% 16.67%
0.77%
0.83%
1.14%
1.24%
1.17%
-5.65% 51.95%
100.00% 100.00% 100.00% 100.00% 100.00%
0.00%
0.00%
Q2FY14
Promoter
29%
FII
DII
34%
17%
20%
Other

3. Investment rationale
Strong brand equity with acquisitions and partnerships with Starbucks & Pepsico
cquisitions
Strong brand image of “Tea products” are the major strength of TGBL which contributed
72% of revenue in top line number. Tea revenue grew at moderate pace over last five
years at a CAGR of 8.85%, instead of an expected CAGR growth of 9.00% respectively
over the period of FY13A to FY18E. TGBL has substantial growth opportunity not only in
India but across the globe. Acquisitions & partnerships with Starbucks & Pepsico offer a
huge market potential for the company as it can market its products in local & global
markets.
Exhibit 01: Growth in Tea revenue
Exhibit 02: Growth in Coffee revenue
8000
11%
6000
5766
5290
4767
6285
9%
9%
9%
12%
3000
10%
6851
2500
1000
2%
20%
500
0%
2247
2043
1857
0
15%
9%
10%
10%
10%
2000
0
FY12A
FY13A
FY14E
Tea
FY15E
Growth
25%
1500
4%
1706
2000
6%
6%
4000
8%
20%
2472
10%
5%
0%
FY12A
FY16E
FY13A
FY14E
Coffee
Source: Perception research
FY16E
Source: Perception research
Exhibit 03: Growth in paper and other revenue
FY15E
Growth
Exhibit 04:NIM - Growth in Total revenue
120
100
80
95
90
42% 86
100
50%
40%
80
30%
12000
12%
10000
8000
6633
11% 7352
11%
8781
8034
9597
11%
11%
6000
60
20%
40
20
8%
10%
5%
5%
5%
0
0%
FY12A
FY13A
FY14E
Paper & Other
Source: Perception research
FY15E
Growth
FY16E
10%
4000
10%
2000
9%
9%
9%
0
9%
FY12A
Source: Perception research
FY13A
FY14E
Total Revenue
FY15E
Growth
FY16E

4. Impressive global presence helps to continue the growth at same space further
Healthy growth has been added by its global presence in tea segment, in India (22%
value share of Tata Tea), Canada (Tetley), UK (27% value share of Tetley), acquisition of
leading brands across the globe, Joekels in South Africa (third largest player), Good Earth
in US (21% volume share), Jemca in Czech Republic (which is the market leader) and
Vitax in Poland (16% share of fruit tea market). With this strong s globe presence, we
believe that TGBL would continue to grow its tea revenues at the same space further.
Favorable fall down in Kenya tea prices
Majority of Tetley Teas requirement is sourced from Kenya. Since Kenyan tea prices are
fall down by 24.86% on a yoy basis till Oct 2013 it will help TGBL lower its raw material
cost across geographies which would also help support its margins
margins.
Exhibit 05: Kenya tea prices
400
300
200
100
Jun 13
Jun-13
Jul 13
Jul-13
Aug 13
Aug-13
Sep 13
Sep-13
Oct 13
Oct-13
Jun 13
Jun-13
Jul 13
Jul-13
Aug 13
Aug-13
Sep 13
Sep-13
Oct 13
Oct-13
May 13
May-13
Apr 13
Apr-13
Mar 13
Mar-13
Feb 13
Feb-13
Jan 13
Jan-13
Dec 12
Dec-12
Nov 12
Nov-12
Oct 12
Oct-12
Sep 12
Sep-12
Aug 12
Aug-12
Jul 12
Jul-12
Jun 12
Jun-12
May 12
May-12
Apr 12
Apr-12
Mar 12
Mar-12
Feb 12
Feb-12
Jan 12
Jan-12
Dec 11
Dec-11
Nov 11
Nov-11
Oct 11
Oct-11
0
Price
Source: Perception research
Exhibit 06: Change in Kenya tea prices
4.00%
2.00%
-6.00%
-8.00%
-10.00%
-12.00%
Source: Perception research
May 13
May-13
Apr 13
Apr-13
Mar 13
Mar-13
Feb 13
Feb-13
Jan 13
Jan-13
Dec 12
Dec-12
Nov 12
Nov-12
Oct 12
Oct-12
Sep 12
Sep-12
Aug 12
Aug-12
Jul 12
Jul-12
Jun 12
Jun-12
May 12
May-12
Apr 12
Apr-12
Mar 12
Mar-12
Feb 12
Feb-12
Jan 12
Jan-12
Dec 11
Dec-11
Nov 11
Nov-11
-4.00%
Oct 11
Oct-11
0.00%
-2.00%

5. Financials & projections
Exhibit 07: Tata global beverages ltd. Valuation (Rs In Cr)
Profit And Loss A/C
Net Sales
Cost of sales
Depreciation
Gross Profit
Ad, S&D Expenses
Operating profit
Other income
Net interest
Pre tax Income
Income tax
Post Tax Income
Net Profit
FY12A FY13A
6631
7351
4218
4452
96
105
2317
2793
1768
2130
549
663
95
58
70
84
574
637
142
164
432
473
356
373
FY14E
8033
4901
113
3019
2250
770
61
92
738
188
550
450
FY15E
8779
5356
122
3301
2459
843
64
99
808
206
602
502
FY16E
9596
5854
129
3612
2687
925
67
106
886
226
660
560
Ratio And Valuation
Value Per Share
EPS
DPS
CEPS
BV/Sh
Dividend Pay Out Ratio(%)
Balance Sheet
FY12A FY13A
Net Fixed Assets
4244
4435
WIP
49
91
Investments
567
578
Current assets
Inventories
1161
1383
Sundry Debtors
652
713
Cash and Bank
736
698
Other Current Assets
0
0
Loans and Advances
871
897
Current Liabilities
Creditors
1311
1640
Other
448
513
Net Current Assets
1661
1538
Long Term debt
888
1017
Defer Tax
1066
814
Net Worth
4566
4810
Share Capital
62
62
Total Reserves
4504
4748
Net Worth
4566
4810
Source: Perception research
FY14E
4759
50
607
FY15E
5101
50
637
FY16E
5376
50
669
Efficiency Ratios
Receivable days
Inventory Days
Payable days
1409
759
709
0
916
1546
829
646
0
1005
1689
906
713
0
1098
1686
531
1576
1088
814
5089
62
5028
5089
1843
580
1602
1164
814
5413
62
5351
5413
2014
634
1758
1246
814
5794
62
5732
5794
FY12A FY13A
FY14E
FY15E
FY16E
5.76
2.15
7.31
73.83
6.03
2.15
7.73
77.78
7.27
2.33
9.10
82.30
8.11
2.43
10.08
87.53
9.06
2.45
11.15
93.69
6.03%
7.80%
1.12
3.63
10.17
6.24%
7.75%
1.23
3.22
10.31
7.10%
8.84%
1.27
3.48
10.59
7.49%
9.27%
1.31
3.47
10.59
7.85%
9.67%
1.35
3.47
10.59
35
102
82
36
107
77
36
110
80
36
110
80
36
110
80
Margins
Gross Profit Margin (%)
Operating Profit Margin (%)
EBITDA Margin(%)
Pre-Tax Profit Margin (%)
Tax
Net Profit Margin (%)
34.9%
8.3%
11.2%
8.7%
5.4%
38.0%
9.0%
11.2%
8.7%
5.1%
37.6%
9.6%
11.7%
9.2%
5.6%
37.6%
9.6%
11.7%
9.2%
5.7%
37.6%
9.6%
11.7%
9.2%
5.8%
Valuation Ratio
P/E (x)
P/BV (x)
EV/Net Sales(x)
EV/EBITDA(x)
EV/EBIT(x)
EV/CE(x)
M Cap / Sales
27.76
2.17
1.68
5.23
5.58
1.94
1.20
23.62
1.83
0.40
3.09
3.58
0.66
0.12
19.52
1.73
1.09
10.18
12.05
2.36
0.93
17.50
1.62
1.51
13.56
15.59
3.79
1.49
15.68
1.52
1.24
11.04
12.65
2.88
1.20
Performance Ratios
ROA (%)
ROE (%)
Asset Turnover(x)
Inventory Turnover(x)
Debtors Turnover(x)

6. Valuation
Exhibit 08: Tata global beverages ltd. Valuation (Rs In Cr)
Risk Free Rate
Market return
Market Premium
Beta
Ke
Kd
G
Equity
Debt
We
Wd
WACC
Source: Perception research
7.00%
13.76%
6.76%
0.33
9.24%
8.50%
3.00%
4810.12
1016.83
0.83
0.17
9.11%
Valuation
FCFF
Terminal Value
Discount Rate
Period
Discount PV of FCFF
PV of FCFF
PV of TV
Enterprise value
Net debt & Minority Income
Equity Value
No of shares
Stock Price
FY14E
612.89
FY15E
653.80
FY16E
689.19
FY17E
733.36
0.92
1
561.73
0.84
2
549.19
0.77
3
530.59
0.71
4
517.46
At CMP of 142 the stock is trading at 19.52x & 17.50x its FY14 & FY15E EPS. Strategic
14E
global presence, strong brand image and favorable raw material cost are the most
attractive points of TGBL which lead the top and bottom line numbers at a CAGR of
9.24% and 14.54% respectively, over the period of FY13A to FY
FY16E. Based on our DCF
valuation we arrive at the target price of 162 with a BUY rating and a potential upside of
15%.
FY18E
779.57
13143.78
0.65
5
504.14
2663.10
8499.97
11163.08
1116.80
10046.28
61.84
162.46

7. Investment Criteria & Disclaimer
Rating
Buy
Accumulate
Hold
Sell
Low Risk
Over 15 %
10 % to 15 %
0% to 10 %
Negative Returns
Risk Description
Low Risk
Medium Risk
High Risk
Medium Risk
Over 20%
15% to 20%
0% to 15%
Negative Returns
High Risk
Over 25%
20% to 25%
0% to 20%
Negative Returns
Predictability
High predictability
Moderate predictability
Low predictability
Price Volatility
Low volatility
Average volatility
High volatility
Analyst Details
Pushkaraj Jamsandekar
MMS - Finance
Contact - +09869139507
Email ID - pushkarajjamsandekar@yahoo.com
Perception Research & Advisory
Disclaimer
This document is for private circulation and information purposes only and should not be regarded as an investment,
taxation or legal advice. Investors should seek financial advice regarding the appropriateness of investing in any securities or
investment strategies discussed or recommended in this publication and should under-stand that statements regarding
future prospects may not be realized. In no circumstances it be used or considered as an offer to sale or a solicitation of any
offer to buy or sell the securities mentioned in it. We and our affiliates, officers, directors and employees including persons
involved in the preparation or issuance of this material may: (a) from time to time, have long or short positions in, and buy
or sell the securities thereof, of company(ies) mentioned herein or (b) be engaged in any other transaction involving such
securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) dis-cussed herein or act as an advisor or lender or borrower to such company or have other potential conflict
of interest with respect to any recommendation and re-lated information and opinions. The information contained in this
publication may have been taken from trade and statistical services and other sources, which we believe are reliable. We
does not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinion expressed reflects judgments at this date and are subject to change without notice. Caution: Risk of loss in trading &
investment can be substantial. You should carefully consider whether trading & investment is appropriate for you in light of
your experience, objectives, financial resources and other relevant circumstances
circumstances.
Perception Research & Advisory