Share price of Tata Consumer Products jumped over two percent at market open after Bisleri International chairman said the bottled water brand is in talks with the Tata group FMCG firm and others for selling some of his stake.
At 9:45 am, the stock was quoting at Rs 791 on the National Stock Exchange, up 2.82 percent. Trading volumes were twice the 20-day average volume at 2,505,900.
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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.
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.
For the year, Tata Consumer Products share price is up 5 percent. In the last six months, it has gained 10 percent and currently has a market cap of Rs 73,299 crore.
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