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Tata Global Beverages 3QFY2014 performance highlights and results update

January 31, 2014, Friday, 09:52 GMT | 04:52 EST | 15:22 IST | 17:52 SGT
Contributed by Angel Broking


For 3QFY2014 Tata Global Beverages (TGBL) posted a 49% yoy growth in its bottom-line to Rs.120cr, aided by tax credit of Rs.46cr arising out of stake sale in a US based beverage company. We maintain our Neutral view on the stock.
 
Key highlights: For 3QFY2014 TGBL’s performance was below estimates. The company posted an 8% yoy growth in its top-line to Rs.2,054cr aided by good performance in some key markets and favorable foreign exchange translation impact. Its tea business posted a top-line growth of 11.1% yoy, while the coffee business posted a growth of 2% yoy. The OPM came in below estimates and stood at 8.2% (vs our estimate of 9.5%). During the quarter, the company’s profitability was affected by higher investment behind brands and new initiatives. While the tea business posted a 16.6% yoy growth in its profits, the coffee business posted a 47% yoy de-growth in profits. TGBL’s adjusted PAT was down 6% yoy and stood at Rs.87cr.
 
Outlook and valuation: We expect TGBL to post a CAGR of 8.9% and 11.4% in its top-line and bottom-line respectively, over FY2013-15E. At the current market price, the stock is trading at 17.4x FY2015E earnings. We maintain our Neutral view on the stock.