Tata Consumer shares hit 52-week high; here's why

Shares of Tata Consumer Products Ltd surged as much as 3.68% to hit a 52-week high of ₹1,161 apiece on the BSE after a report stated that the FMCG major is in talks to acquire Capital Foods Pvt Ltd and Organic India.

The scrip opened higher at ₹1,124, up 0.38%, as against the previous closing price of ₹1,119.70. At 12:42 pm, the share price of the FMCG major was trading 1.41% higher at ₹1,135.50. The surge in share price is in line with the broader BSE Sensex, which was trading 653 points or 0.91% higher at 72,389.40. The company’s market capitalisation stood at ₹1,05,489 crore with 93,125 shares exchanging hands on the BSE as against the two-week average of 0.71 lakh shares. The company hit a 52-week low of ₹685 on March 16 last year.

In the past one month, three months and a year, the counter has given 19.70%, 27.26% and 50.38% in return, respectively. In the year-to-date period, the counter has given 5.12% in returns.

The Tata Group-owned company is reportedly planning to acquire a 75% stake in Capital Foods — the manufacturer of condiments, food products and ingredients under the Ching’s secret and Smith & Jones brand — from the existing investors, though no official information was available till the filing of the story today. At present, European investment firm- Invus Group holds a 40% stake, whereas the U.S. private equity group General Atlantic owns a 35% stake in the company, thus valuing the company at ₹5,100 crore. With the acquisition, the FMCG major is eyeing a stake value worth ₹3,825 crore in the company. 

Meanwhile, Tata Consumers Products will buy a controlling stake in Fabindia-owned Organic India for a valuation of ₹1,800 crore. Premji Invest and Lighthouse Capital currently own a 40% stake in Organic India.

As per the report, through these acquisitions, the Tata Group-owned subsidiary will lock heads with Nestle’s Maggie which currently commands a 60% market share in the instant noodles segment. The announcement about acquisitions is expected by next week.

If the acquisition pulls through, it will be a significant step towards the company’s aim to expand its portfolio in the buzzing FMCG segment. In order to consolidate its presence in the growing FMCG market, Tata Coffee merged with Tata Consumer Products Limited and TCPL Beverages and Foods Ltd (TBPL) with effect from January 1.

Notably in FY23, the company’s net sales surged to ₹13.783 crore as against ₹9,637 crore in FY20.