What Tata Consumer’s potential Bisleri acquisition could mean for the stock

“Tata Consumer (TCPL) might acquire Bisleri, India’s largest water brand. We like TCPL’s strategy of undertaking bolt-on and niche acquisitions (SOULFULL, whose distribution Tata scaled up 10x). Bisleri is likely to turn in revenue/PAT of ₹25 bn/ ₹2.2 bn in FY23E. Yet, if TCPL acquires it only via debt, interest cost may dent profits from Bisleri,” said brokerage and research firm Edelweiss in a note.

In a clarification to the stock exchanges recently, Tata Consumer Products said it evaluates strategic opportunities for growth of its business on an ongoing basis. In a regulatory filing the Tata Group firm also said that it is in discussion with Bisleri International, for growth and expansion of the business of the company and will make appropriate announcements in compliance with the guidelines, as and when any such requirement arises.

“TCPL can also potentially look at scaling up Bisleri beyond water given its capabilities. Tata has clarified that it keeps evaluating opportunities and is in discussions with various parties, including Bisleri, and will make appropriate announcements as and when needed,” the brokerage’s note added while it maintained its Buy rating on Tata Consumer shares with a target price of ₹880 apiece.

TCPL sells brands such as Himalayan Natural Mineral Water and Tata Copper Plus. Other brands in the bottled-water segment include Pepsi’s Aquafina, Coca Cola’s Kinley, Parle Agro’s Bailley and Qua from the Narang group. If TCPL’s deal with Bisleri is finalised, then it is going to convert the Tata group firm into a leader in the fast-growing bottled water segment.

The Tata group firm, which has the ambition to be a “formidable player in the FMCG industry” has recently done some acquisitions and is expanding its reach in the addressable market.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.