Tata Global rallies as Starbucks set to open first café

MUMBAI: Shares of Tata Global Beverages surged higher on Friday after Seattle-based coffee chain Starbucks, announced that it will open the first store in south Mumbai by October-end.

At 02:50 p.m.; the stock was at Rs 141.35, up 7.21 per cent on the BSE. It touched a high of Rs 142.30 and a low of Rs 132.20 in trade today.

The duo had announced 50:50 joint venture late January this year, involving an initial investment of Rs 400 crore. The partners had said they would open the first outlet by August-September, and 50 stores by the year end. Now the first cafe opening has been pushed to October-end.

Recently, Kim Eng Securities India initiated coverage on Tata Global Beverages with a ‘Buy’ recommendation. The brokerage sees the company as a market leader with 21 per cent market share in the India tea market and will benefit from rising beverage consumption in India and improving free cash flows.

“TGBL is still in the investment phase of creating new brands and entering new geographies. This leads to low profitability from overseas markets and new businesses. We find ‘sum-of-the-parts’ valuation most appropriate to reflect the value of different brands of TGBL and set a target price of Rs 175 per share,” the brokerage said.

Chandan Taparia, Derivative Analyst, Anand Rathi is bullish on the counter.

“After a consolidating for past seven weeks, the stock is again set for a positive movement. One can buy with stoploss of Rs 131 for the target of Rs 148-150 levels,” Taparia said.