Tata Consumer shares snap two sessions gaining streak; here’s why

Shares of Tata Consumer Products (TCPL) declined nearly 2% in intraday trade on Monday, snapping a two-session gaining streak, in sync with the broader market. The sentiment was further dented after the Tata Group company said that it ceased negotiations with packaged water maker Bisleri International over a potential acquisition.

Tata Consumer share price opened 1% lower at ₹698.95 against Friday’s closing price of ₹706.10 on the BSE. In the first two hours of trades so far, the stock declined as much as 1.95% to ₹692.30 levels, with 14,000 shares changing hands over the counter on the BSE compared with the two-week average volume of 88,000 scrips. The market capitalisation stood at ₹64,543 crore at the time of reporting. In comparison, the BSE Sensex was trading 692 points, or 1.2%, lower at 57,297 levels, tracking weak cues from global peers.

TCPL shares have delivered a negative return of 7% in the last one year, while it shed nearly 14% in a six-month period. On the year-to-date (YTD) basis, the largecap stock fell 9%, while it lost 4% in a month.

In a post-market hour exchange filing on Friday, TCPL clarified that the company had ceased negotiations with Bisleri with regard to a potential deal. "The company wishes to update that it has now ceased negotiations with Bisleri with regard to a potential transaction and to confirm that the company has not entered into any definitive agreement or binding commitment on this matter," the Tata Group company said in a BSE filing.

In November last year, various media reported that the company was in discussions to acquire Bisleri in a deal worth ₹6,000-7,000 crore. The acquisition of Bisleri was seen as part of the Tata group’s strategy to expand its presence in the fast-growing Indian bottled water market. The consumer products company already sells packaged mineral water under the brands Himalayan and Tata Copper Plus Water and Tata Gluco+ in the hydration segment.

Despite the stiff competition in the packaged drinking water industry, Bisleri is the market leader in India with a share of 60% in the bottled water segment. The other key players which compete in this sector are Coca-Cola India’s brand Kinley, PepsiCo's Aquafina, Indian Railway Catering and Tourism Corporation (IRCTC)'s Rail Neer, and Bailley from Parle Agro.

TCPL, which was created by grouping the brands like Tata Tea, Tata Coffee, Tata Salt and Tata Sampann, has been expanding its portfolio through acquisitions and product innovations. Tata acquired Soulfull to focus on the health and wellness food category.

For the October-December quarter of the current fiscal, TCPL reported a consolidated net profit of ₹396.45 crore, up 28% from ₹287 crore in the same quarter last year. Revenue from operations rose 8% year-on-year (YoY) to ₹3,475 crore. Consolidated EBITDA (earnings before interest, taxes, depreciation and amortisation) stood at ₹458 crore in Q3 FY23, down 2% on yearly basis, while EBITDA margin was at 13.1%, down 100 basis points from the year-ago period.