Tata Global Beverages Research Report By Karvy

Tata Global Beverages gets 90% of its revenue from branded business. 73.6% of revenue comes from Tea, 25.1% is from Coffee segment and remaining is from Water division. Factoring the expected growth in operating margins, growth in operating cash flow of the business and discounting the listed company-Tata Coffee’s share of EPS on consolidated EPS, we assign 5 year average PE multiple of 22.0x to FY17E EPS and give “BUY” rating for a target of Rs. 160, representing with an upside potential of 20%.

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