What Tata Consumer's possible Bisleri acquisition could mean for the stock

 

• Tata Consumer Products (TCPL) may acquire India's largest water brand Bisleri

Bisleri International Pvt. Ltd is in advance discussions to sell its businesses, including its flagship bottled water brand Bisleri, and Tata Consumer Products Ltd (TCPL) is the frontrunner, while other companies are also in the fray as the deal is yet to be finalised. Is.

Tata Consumer (TCPL) may acquire Bisleri, India's largest water brand. We like TCPL's strategy of making bolt-on and niche acquisitions (SOULFULL, whose distribution Tata grew 10x). Bisleri's revenue/PAT is expected to be ₹25 billion/₹2.2 billion in FY23E. Nevertheless, if TCPL achieves this only through debt, the interest cost could reduce profitability from Bisleri," brokerage and research firm Edelweiss said in a note.

In a recent clarification to the stock exchanges, Tata Consumer Products said it evaluates strategic opportunities for growth of its business on an ongoing basis. In a regulatory filing, the Tata group firm also said that it is in discussion with Bisleri International for growth and expansion of the company's business and will make appropriate announcements in compliance with the guidelines as and when such a need arises.

“TCPL could potentially consider taking Bisleri beyond water considering its capabilities. Tata clarifies that it continues to evaluate opportunities and is in discussions with various parties, including Bisleri, and will make suitable announcements as and when required," the brokerage's note added, while it set a target price of ₹ has maintained its buy rating on Tata Consumer shares with Rs.880 each.

TCPL sells brands such as Himalayan Natural Mineral Water and Tata Copper Plus. Other brands in the bottled water segment include PepsiCo's Aquafina, Coca-Cola's Kinley, Parle Agro's Baileys and Narang Group's Kwa. If TCPL's deal with Bisleri goes through, it is going to turn the Tata group firm into a leader in the fast-growing bottled water segment.

The Tata group firm, which has an ambition to become "a formidable player in the FMCG industry", has made a few acquisitions in the recent past and is expanding its reach in the addressable market.