Nuwama Institutional Equities said that if the Bisleri acquisition goes through, it would be the right fit for Tata Consumer Products (TCPL) at the right price. Nuwama estimated Bisleri’s FY23 revenue at Rs 2,500 crore and profit after tax at Rs 220 crore. The brokerage said the acquisition of Bisleri could add up to 18 per cent to TCPL’s both revenue and profits, excluding interest costs.
If TCPL acquires Bisleri only through debt, the interest cost could eat into the bottled water maker’s bottom line.
Tata Consumer, Numava said, will be a big and massive play with Bisleri, as it is already present at the premium-end under Himalayan and also has brands like Tata Copper Plus Water and Tata Gluco+ in the hydration segment.
The domestic brokerage said it likes TCPL’s strategy of bolt-on and niche acquisitions such as Soulful, whose distribution has been increased 10x by Tata group companies. It was felt that the Tata Group firm could potentially look at expanding the business further, especially into soft drinks.
Overall, “If TCPL acquires Bisleri, it can enhance the brand/business due to its expertise and capabilities as well as weight of distribution. TCPL will become the dominant player in the branded segment of the market. Overall, our believe that Bisleri can potentially give a boost to TCPL.” Hydration Portfolio. TCPL is one of the most agile companies driving inorganic growth,” the brokerage said.
Nuwama said Tata Consumer could potentially look at expanding Bisleri beyond water and scale it further given its capabilities. It was noted that FY22 was the first time that Himalayan turned profitable, “which clearly shows its improved execution.” The current management is likely to continue for two years as part of the deal, allowing a seamless transfer.
Meanwhile, the Tata group has clarified that it continues to evaluate opportunities and is in discussions with various parties, including Bisleri, and will make appropriate announcements as and when required.
“We continue to maintain ‘Buy’ on TCPL with a target price of Rs 880,” it said.
Read also: Tata Consumer Products shares up 3% as company looks to buy Bisleri for Rs 7,000 crore
