Tata Coffee & TV18 Shareholders Rejoice As Stocks Soar

Tata Coffee has had an incredible run on the stock market with its’ stock price soaring nearly 50% in the past three months. The move has been in tandem with parent Tata Global Beverages surge in the wake of the partnership with the Starbucks chain.

Today, Tata Coffee shocked investors out of their wits by unexpectedly surging to an all-time high of 1,348 and hitting the upper ceiling limit of 20%.

Some analysts have been bullish on Tata Coffee’s prospects. In a research article by Bhavana Acharya in BusinessLine, a strong buy call was given when Tata Coffee was quoting at Rs. 1059. The author pointed out that the fall in the Arabica prices augured well for Tata Coffee because its margins would increase. She also pointed that the (then) valuation of 16 times TTM EPS was very reasonable especially in the light of the turnaround in the affairs of its USA subsidiary Eight O’Clock coffee.

Well, Bhavana Acharya can take a bow because her predictions have indeed come true.

Rakesh Jhunjhunwala’s latest stock pick TV18 Broadcast continued its strong run on the bourses with a 14% surge today to reach Rs. 35.65. TV18 Broadcast has nearly doubled in 3 months.

Interesting, Samir Arora revealed in his interview to CNBC TV18 that even he was “super-bullish” on TV18 Broadcast. He revealed that apart from his Fund Helios Capital, he had bought tons of TV18 Broadcast, before the rights issue, in the rights issue and after the rights issue, for her personal portfolio as well. He jokingly complained that Rakesh Jhunjhunwala had robbed him of the “thunder” of being the discoverer of the stock.

Anyway, now the bottom-line is whether there is any more juice left in either on the stocks.

Tata Coffee reported superb results for Q2FY 2013 with a 109% growth in net profit to Rs 36.8 crore and a 15% growth in total income to Rs 477 crores. This growth came because of a sharp turnaround in its global subsidiary Eight O’ Clock Coffee. The instant coffee operations continued to show substantial growth which was aided by better operating results from coffee plantations coupled with a favourable foreign exchange on the exports. Tata Coffee will also benefit from the relationship with Starbucks to supply coffee seeds for its outlets in India.

TV18 Broadcast will be a beneficiary of the digitization process. It is a dominant player in the Media sector and at a market capitalization of about Rs. 6,000+ crores, it is not very expensive. Of course, can you go wrong when two super-bulls are bullish on the stock.

So, my take is that both are great stocks to add to the portfolio slowly and steadily at every decline. In 5 years time, you will be looking at super-duper multibaggers.