Tata Coffee can move to Rs 1200: Tulsian

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Tata Coffee can move to Rs 1200: Tulsian

Tata Coffee can move to Rs 1200 in next 10-12 months time, says SP Tulsian, sptulsian.com.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by SP Tulsian See what other Experts & Brokerages are saying about Tata Coffee See messages about Tata Coffee

Tata Coffee can move to Rs 1200 in next 10-12 months time, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "If you see the yesterday's alliance of Tata and Starbucks I think though the JV has been entered with Tata Global which is the holding company of Tata Coffee because they are holding 57% stake in the company, but the total benefit will flow to Tata Coffee because they will be supplying the coffee. The profits and all will be accrued in a major way on supply of the material or the supply of the product to the joint venture. So mainly for that reason I have picked up this stock."

He further added, "If I just first come on the financial performance of the company, the company posted EPS of close to about Rs 28-29 for the first nine months. But on a top-line of close to Rs 1,150 crore, Eight O'clock Coffee, which is a 50% subsidiary of the company having good presence in US, contributed only Rs 3 crore to the PAT. For the same period in 2010, the PAT was Rs 72 crore from the same company. So even though Eight O'clock Coffee has not contributed much they have been able to maintain the bottom-line."

"If you take the case of FY11 EPS, it was close to about Rs 38-39 while the company has posted an EPS of about Rs 28-29 for nine months ended December 2011. So it is most likely that they will be able to close FY12 with an EPS of close to about Rs 37-38. Considering the launching plans given by the company initially by the Starbucks and all that, probably the company is heading for giving an EPS of over Rs 50 going forward for FY13. I am also quite optimistic that their subsidiary in US, Eight O'clock Coffee, will perform very well and again start contributing to the extent of about Rs 50-60 crore and if 50% of that gets added that will further boost the bottom-line of the company."

"So taking all this into consideration, I think Tata Coffee looks quite a decent investment at this price because of the consumption theme. Also, if you compare with the other peers, this stock has good upside potential and I am expecting that share to move to Rs 1,200 in next maybe about 10-12 months time."