Share price of Tata Consumer Products jumped 3 per cent at market open after the FMCG major confirmed that it is buying packaged water company Bisleri.
For the year, Tata Consumer Products share price is up 5 per cent. In the last six months, it has gained 10 per cent and currently has a market cap of Rs 73,299 crore.
Speaking to CNBC-TV18, Ramesh Chauhan said that the management is in discussions with Tatas. “Other players are also in the fray, but we cannot share more details,” he said.
However, Chauhan clarified that they are looking to sell part stake, not whole. “We would like to hold on to some stake,” he said.
Bisleri was originally an Italian brand that set up shop in India in Mumbai in 1965. The Chauhans acquired it in 1969. The company has 122 operational plants (13 of them owned) and a network of 4,500 distributors and 5,000 trucks across India and neighbouring countries.
If the negotiations fructify, Tata Consumer Products’ water portfolio will scale up with addition of strong name in the branded water segment, believe analysts. “The company already has Himalayan and Tata Copper Plus Water, which cater to the premium segment. Bisleri is strong name amongst the masses. TCPL also has products such as Tata Gluco Plus and Fructis, which helps it to build strong liquid beverage portfolio to play in the domestic market,” said Kaustubh Pawaskar of Sharekhan by BNP Paribas.
The Tata company can also leverage benefits from Bisleri’s strong distribution model in general trade. As per Bisleri’s website, it has a network of 4,500 distributors and 5,000 distribution trucks across India and neighbouring countries.
According to reports, the stake sale might be done at an estimated Rs 6,000 – 7,000 crore. Currently, Bisleri’s annual turnover stands at Rs 2,500 crore with profit at Rs 220 crore. This indicates enterprise value/sales of 2.8 times which is a reasonable valuation, believe analysts.
Bisleri International had an annual revenue of Rs 2,500 crore the latest full financial year with a profit of approximately Rs 220 crore, also sells spring water under the brand Vedica. The company also marks its presence in the soft beverages segment with Spyci, Limonata, Fonzo and Bisleri Soda.
The Tata Group’s consumer business currently sells packaged mineral water under the brand name Himalayan. It also operates in the water segment with other brands — Tata Copper Plus Water and Tata Gluco+.
