Tata Consumer Products Ltd, the consumer arm of the Tata Group, saw its share price soar on Wednesday, reaching close to its one-year high level. The stock jumped 4.40% to touch an intraday high of Rs 883, which was just 0.10 per cent shy of its 52-week high of Rs 883.85, recorded on July 26 this year. The stock finally closed 4.04 per cent higher at Rs 879.90.
What Triggered the Stock Rally?
The surge in Tata Consumer share price was triggered by a news report that claimed that the company was in talks to buy a majority stake in Haldiram’s, the popular Indian snack maker. According to Reuters, Tata Consumer was eyeing at least 51 per cent of Haldiram’s, but was not comfortable with the $10 billion valuation sought by the latter. The report also said that Haldiram’s was in discussions with private equity firms such as Bain Capital to sell a 10 per cent stake.
However, Tata Consumer denied the report and clarified to the stock exchanges that it was not in negotiations as reported in the news article. The company also said that it evaluates various strategic opportunities for growth and expansion of its business on an ongoing basis, and would make appropriate announcements in compliance with the regulations, as and when required.
Why is Haldiram’s Attractive for Tata Consumer?
Haldiram’s is one of the leading players in the Indian snack market, which is estimated to be worth $6.2 billion, according to Euromonitor International. Haldiram’s has a market share of almost 13%, matching that of PepsiCo, which owns the popular Lay’s chips brand. Haldiram’s products are also sold in overseas markets such as Singapore and the United States. The company also operates around 150 restaurants that offer local food, sweets and western cuisine.
Tata Consumer, which owns UK tea company Tetley and has a partnership with Starbucks in India, could benefit from acquiring Haldiram’s as it would diversify its product portfolio and strengthen its presence in the fast-growing food segment. Tata Consumer already has brands such as Tata Salt, Tata Sampann and Tata Soulfull in its portfolio.
How is Tata Consumer Performing on Technical Charts?
On technical charts, Tata Consumer stock was trading above all its short-term and long-term moving averages, indicating a bullish trend. The stock’s 14-day relative strength index (RSI) was at 65.29, which is neither overbought nor oversold. The stock has a price-to-earnings (P/E) ratio of 78.36 and a price-to-book (P/B) value of 6.16.
Analysts have a target price of Rs 932 for Tata Consumer stock, implying a potential upside of 6 per cent from its current level. The stock also has a low volatility with a one-year beta of 0.93.
How Did the Indian Equity Markets Perform on Wednesday?
Meanwhile, Indian equity benchmarks ended higher for the fourth consecutive session on Wednesday, led by gains in consumer, pharma and energy stocks. The BSE Sensex rose 100 points or 0.15 per cent to settle at Rs 65,881, while the NSE Nifty moved 36 points or 0.18 per cent up to close at 19,611.
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