If Bisleri is successful, it will be the right fit for Tata Consumer Products TCPL Nuvama, and Bisleri's FY 23 revenues at Rs 2,500 crore and profit after tax at Rs 220 crore, according to Nuvama Institutional Equities. The brokerage said that the acquisition of Bisleri could add 18 per cent to both revenue and profits for TCPL, excluding interest costs.
If TCPL acquires Bisleri only via debt, interest cost could negatively affect profits from the bottled water maker, it added.
Tata Consumer, Numava said, is going to get a larger and mass play with Bisleri, as it already has a presence in the premium-end under Himalayan and also has brands such as Tata Copper Plus Water and Tata Gluco in the hydration segment.
The domestic brokerage likes TCPL's strategy of bolt-on and niche acquisitions, such as Soulfull, whose distribution has been scaled up by the Tata group companies by 10 times. It felt that the Tata group firm could look at further scaling up business, especially in fizzy drinks.
If TCPL acquires Bisleri, it can ramp up the brand business due to its expertise and capabilities as well as distribution heft. TCPL will become the dominant player in the branded part of the market. We believe Bisleri can potentially boost TCPL's hydration portfolio. The brokerage said that TCPL is one of the most agile companies in the world in driving inorganic growth.
Nuvama said Tata Consumer could look at scaling up Bisleri beyond water and scaling it up further due to its capabilities. It noted that FY 22 was the first time that Himalayan turned profitable, showing its superior execution. The current management will likely continue for two more years as part of the deal, which will lead to seamless transfer.
Tata Group is in discussions with various parties and will make appropriate announcements as and when needed, and keeps evaluating opportunities and is in discussions with various parties, including Bisleri.
It said that we continue to maintain a BUY on TCPL with a target price of Rs 880.