Motilal Oswal Financial Services

Tata Consumer Products

BSE SENSEX

34,916

S&P CNX

10,302

30 June 2020

Annual Report Update | Sector: Consumers

CMP: INR388

TP: INR450 (+16%)

Merger paving way for next phase of growth

Buy

Tata Consumer Products’ (TCPL) FY20 annual report highlights the company’s efforts to

leverage the ‘Tata’ brand, create a single FMCG-focused company and participate in

India’s INR30t consumption story. FY20 was a milestone year as TCPL completed merger

with Consumer Products business of Tata Chemicals (now India Food business), resulting

in 33%/64% increase in revenue/EBITDA to INR96.3b/~INR13b. Key highlights below:

India food business to lead next leg of growth



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Stock Info

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

Free float (%)

TATACONS IN

631

355.1 / 4.7

408 / 214

-2/37/55

1453

65.3



Financials Snapshot (INR b)

Y/E MARCH

FY20 2021E 2022E

Sales

96.4 104.2 114.8

EBITDA

12.9 14.6 16.9

Adj. PAT

7.3

8.5 10.3

EBITDA Margin (%) 13.4 14.0 14.8

Cons. Adj. EPS (INR) 8.0

9.3 11.2

EPS Gr. (%)

66.4 16.1 21.3

BV/Sh. (INR)

150 156

163

Ratios

Net D:E

RoE (%)

RoCE (%)

Payout (%)

Valuations

P/E (x)

EV/EBITDA (x)

Div. Yield (%)

FCF Yield (%)

(0.1)

6.9

8.5

46.5

48.6

26.4

0.9

4.8

(0.1)

6.1

7.8

31.1

41.8

23.4

1.4

3.1

(0.1)

7.1

9.1

28.7

34.5

20.1

1.6

4.5



Revenue from the recently merged Consumer Products business (now India

Food business) of Tata Chemicals grew 12% YoY (to INR20.6b), majorly driven

Tata Salt

and increased contribution from

Tata Sampann.

EBIT margins

contracted by 410bp to 12.9% (or INR2.7b), largely due to aggressive expansion

initiatives undertaken by the company in this segment.

The India Food business – comprising

Tata Salt and Tata Sampan,

which

includes pulses, spices and condiments, and ready-to-cook (RTC) – should

orchestrate a major shift in the market from the unorganized to the organized

sector. Thus, the segment should drive the next phase of TCPL’s growth.

India’s pulses/spices markets is currently valued at INR1,500b/INR600b. Out of

this, the share of organized branded players is a mere 1%/30%. Both segments

are estimated to post 15% CAGR, thus leaving enough room for branded

players like

Tata Sampann

to increase share and benefit the most.

Moreover,

Tata Sampann

is expected to reap further benefits by leveraging (a)

strong ‘Tata’ brand name, which is associated with trust and safety, and (b) the

merged entity’s distributor/retail network.

Further, under the current circumstances,

Tata Sampann

is expected to gain

from the shift toward branded products in the F&B segment, which is primarily

due to increased awareness, hygiene and health reasons.

In the salt segment, TCPL enjoys healthy market share of ~30% (market value

at INR70b) among branded players. With robust growth of 16% in the F&B

industry, the salt segment is also expected to report healthy growth. Expansion

of capacity from 1MMT to 1.2MMT at the Mithapur facility should support

volume growth.

India beverage business to sustain growth



India’s tea market is currently valued at INR260b and is dominated by

organized players with 65-70% market share. While tea is a highly popular

beverage in India, there is also an increasing preference in the country for

Green/Black tea due to their health benefits. Thus, we believe the segment is

poised to grow in the coming days.

TCPL’s India beverage business saw revenue/ EBIT growth of 7%/2% to

INR33.8b/INR4.7b (EBIT margin down by 70bp to 14%). Volume growth stood

at 7% in FY20.

Sumant Kumar - Research Analyst

(Sumant.Kumar@motilaloswal.com); +91 22 6129 1569

Research Analyst: Darshit Shah

(Darshit.Shah@MotilalOswal.com); +91 22 6129 1546;

Yusuf Inamdar

(Yusuf.Inamdar@motilaloswal.com); +91 22 6129 1553

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Tata Consumer Products



Acquisition of Dhunseri’s branded tea business (‘Lal

Ghoda’

and ‘Kala

Ghoda’),

with strong regional presence in the state of Rajasthan, should further

complement growth of the India tea business.

Further, investment in existing brands such as

Tata Gold, Chakra Gold

and

Tata

Tea Premium,

coupled with new pilot launches in FY20 are some of the

initiatives undertaken by TCPL.

International beverage business grew marginally by 0.4% on constant currency

basis (excluding the Czech Republic, which TCPL exited in FY20) amidst a

declining tea industry. However, EBIT increased by 30% to INR3.6b with EBIT

margin expansion of 260bp to 11%, driven by new launches across the US/UK.

Further, volume growth for branded tea/coffee businesses stood at 1%/4% on

the back of new product launches. This was supported by panic buying and

stocking-up of tea/ coffee during the latter part of FY20.

The UK business declined 2% to INR11.2b. In the UK, TCPL undertook several

new launches. One among them – Cold Infusions (four new blends) – has

registered sharp growth of 25%.

The US business grew marginally by 1% to INR16.7b. New ethnic range of Tetley

in three new flavors (Masala,

Elaichi

(Cardamom) and Ginger

)

was launched in

the US and is expected to gain traction in the medium to near term.

Internationally, new launches across several brands coupled with gradually

subsiding COVID-19 impact should help resuscitate operations, in our view.

Merger of Tata Chemicals’ Consumer Product business (now India Food

business) with TCPL provides the newly merged entity an opportunity to

capitalize the potential of the INR30tn F&B industry.

Post-merger, synergy benefits are expected to kick in and

Tata Sampann and

Tata Salt

– brands of the India Food business – are expected to benefit the most

by leveraging the vast distributor and retail network of TCPL.

Branded businesses globally were moderately impacted due to COVID-19. Food

service and out-of-home businesses continue to face significant headwinds;

however, TCPL has low presence in these segments.

Further, the impact of COVID-19 is expected to partially subside in the domestic

market as majority of TCPL’s businesses have resumed operations and are

gaining normalcy.

In FY20, revenue/EBITDA/PAT grew 33%/64%/66% to INR96b/INR13b/INR7.3b;

however, on like-to-like basis (excluding India Food business), revenue and

EBITDA grew 4% and 12%, respectively.

In FY20, inventory days decreased by 16 days to 65 days. Further, receivables/

payable days increased by a mere 1/3 days (to 35/36 days). After merger of the

India food business with TCPL, the overall working capital days reduced from 82

to 64 days.

Post-merger, operating cash flow grew 4.2x YoY to INR10.8b in FY20 (v/s.

INR2.5b in FY19), which can be attributed to higher operating profit (from both,

International beverage business picking up



Synergy benefits to kick in; COVID-19 impact gradually subsiding



Sharp rise in CFO, backed by higher operating profit and WC inflow



30 June 2020

Tata Consumer Products



existing and new business) and increased inflow from WC. FCF turned positive to

INR9.3b in FY20 (v/s -INR0.4b in FY19).

Huge cash reserves of INR24.5b provide TCPL ample opportunities for its various

expansions as well as for organic/inorganic acquisitions.

During the year, Goodwill and brands saw sharp increase of ~2.5x (from

INR37.8b in FY19 to INR94.2b in FY20). This was majorly due to addition of

Goodwill and brands post the merger with Tata Chemicals’ Consumer Products

(now India Food) business.

Post-merger, RoCE reduced by 210bp to 8.1% in FY20, mainly due to the

addition of ‘Goodwill and brands (indefinite life)’. However, after adjusting

assets for ‘Goodwill and brands’, RoCE increased by 660bp – from 22.1% in FY19

to 28.7% in FY20.

The merger of the India food business with TCPL is in sync with the company’s

vision to create a single FMCG-focused company. The merger offers multiple

synergies, including higher outlet coverage, focused new product development,

stronger cash flow generation and scale efficiencies.

TCPL has a clear focus to leverage its brand and participate in India’s

consumption story of INR30t. To achieve this end, it merged Tata Chemicals’

Consumer (India food) business with TCPL.

Moreover, TCPL’s new CEO, Mr. Sunil D'Souza, is clearly focused (Corner

office)

on aggressively leveraging the combined synergies of both the merged entities

with emphasis on capitalizing the under-penetrated food segment products

(pulses,

besan,

spices and

chilla

mix) with its robust existing distribution

network and the ‘Tata’ brand.

We maintain our estimates for FY21/FY22E as demand for salt/tea/coffee is not

materially impacted due to the COVID-19 crisis. Also, effects of the pandemic

are visibly subsiding. However, availability of labor and the logistics issue is still a

challenge.

We value the stock on SOTP basis to arrive at a target price of INR450. Maintain

Buy.

EBITDA

5,404

607.868

2,370

5,413

2,053

Multiple (x)

1,53,958

6,322

24,649

1,54,215

20,534

25,532

2,000

8,000

3,93,210

-21,113

4,14,323

922

450

388

16%

Source: MOFSL

Tata Consumer Products

Valuation and view



Exhibit 1: Valuation table

EV/EBITDA

India Tea (TCP Standalone)

Coffee India (ex-Starbucks) @57%

Coffee Overseas

Consumer (Salt & others)

Overseas tea (Tetley UK)

DCF

Starbucks JV

Price/Sales

NourishCo (JV with Pepsi) & others

Enterprise value

Less: Net debt

Market value (INRm)

No. of shares (m)

Target price (INR)

CMP (INR)

Upside (%)

30 June 2020

Tata Consumer Products

Exhibit 2: One year fwd PE (x)

160.0

120.0

80.0

40.0

0.0

P/E (x)

Avg (x)

Max (x)

Min (x)

+1SD

-1SD

122.8

94.5

77.4

60.4

40.0

89.5

Source: Company, MOFSL

Exhibit 3: Consolidated revenue mix

India tea (excl. Salt and Tata Samapnn)

Tata Coffee

Overseas tea

India food business

43%

21%

36%

FY15

32%

23%

45%

FY16

31%

24%

45%

FY17

30%

23%

47%

FY18

28%

25%

47%

FY19

21%

20%

38%

FY20

Source: Company, MOFSL

Exhibit 4: Consolidated EBITDA mix

India tea (excl. Salt and Tata Samapnn)

15%

44%

55%

43%

49%

Tata Coffee

31%

Overseas tea

13%

31%

India food business

24%

13%

25%

46%

FY17

60%

56%

38%

FY20

41%

FY15

FY16

FY18

FY19

Source: Company, MOFSL

Industry – Investment opportunities



India’s food and beverage (F&B) consumption stood at INR30tn as at CY19. The

‘in-the-kitchen’ segment (comprising staples, spices, condiments, dairy, etc.)

contributed ~70% of the total pie, of which organized players form just 10%.

The other segments – ‘on-the-table’ (comprising spreads, sauces, etc.) and ‘on-

the-go’ (comprising snacks, ready-to-eat options, etc.) – are traditionally the

playground of organized players, who contribute 20% and 10%, respectively, of

the market size.

India’s F&B organized sector is believed to have reached INR4tn by end-CY19

and is projected to deliver 16% CAGR to INR10tn by CY25E.

30 June 2020

Tata Consumer Products



Post COVID-19 and the lockdowns, a shift in buying behavior is expected, with

consumers moving toward healthier, better quality and more affordable food

and drink options across all three segments.

TCPL is best placed to benefit from all the three segments, due to the diverse

nature of its product offerings. Its newly merged India food business’

Tata

Sampann

has the potential to grow and leverage the ‘Tata’ brand name and the

sales/distribution network of the company.

Exhibit 5: India F&B market offers huge potential for growth

Source: Company, MOFSL

Exhibit 6: Increasing discretionary spending to complement all-round growth

Source: Company, MOFSL

Key highlights from Chairman, Mr. N. Chandrasekaran’s desk



The sole purpose of changing the name of Tata Global Beverages to Tata

Consumers Products is to rebrand the company as an all-in-one consumer

company rather than just a beverage company.

Merger of Tata Chemicals’ consumer business with the erstwhile Tata Global

Beverage is to consolidated its product portfolio, benefit from new

opportunities and leverage synergies.

Tata Consumer Products signifies the Tata Group’s ambition to become a

leading force in the consumer products category and marks a new strategic

direction for the company. Management on multiple occasions has re-iterated

its plans to become one of the top-10 FMCG companies in India, with diverse

30 June 2020

Tata Consumer Products



product offerings – spanning a mix of iconic and emerging brands in tea, coffee,

water, salt, pulses, spices and packaged foods.

With COVID-19 in the backdrop, TCPL has switched to new delivery models,

launched brand campaigns relevant to the current scenario and is monitoring

buying behavior of the populace.

Key highlights from MD and CEO, Mr. Sunil D’Souza’s desk



Growth drivers highlighted by the CEO include multiplying distribution, focused

and faster innovation and stronger cash flows to invest in growth. Further,

efficiency drivers highlighted by the CEO include superior terms of trade with

channel partners, supply chain opportunities and scale efficiencies in areas such

as marketing and packaging. In India, TCPL’s distribution network spans across

200m households and 2.5m retail outlets.

TCPL plans to replicate its core strategy, which has proven effective for

Tata Salt

and

Tata Tea.

These two products leverage the strong ‘Tata’ brand name and

are driving conversion from unbranded to the branded segment.

Another key driver and area of focus for TCPL is digital transformation. The

company is looking to grow and strengthen its capability in this area by

launching a digital platform for commodity buying. This platform would enable

the entire supply chain – demand planning, procurement, embedding digital

technology and decision-making at the frontline of the sales organization.

The merger of Tata Chemicals’ Consumer (India food) business with the

beverage business allows the company to participate in opportunities spread

across all three segments of the F&B consumer basket – in-the-kitchen, on-the-

table and on-the-go.

TCPL has INR13b in net cash, thereby providing enough headroom for TCPL to

expand in various businesses, without taking on any additional debt.

Impact of COVID-19 across regions



India business:

Industry growth in 4QFY20 decelerated due to the COVID-19

impact in the last 15 days of Mar’20. Going forward, we expect higher demand

for the staples category (v/s. other discretionary items), which will further get

intensified due to COVID-19.

Tea Prices saw sharp increase due to temporary closure of tea estates in India.

Prices are expected to be high until operations return to normalcy. However, no

significant impact is expected on TCPL, as 1QFY21 tea was already procured in

4QFY20. Further, prices are expected to normalize from 2QFY21.

International business:

Branded business globally was moderately impacted

due to COVID-19, as the impact was partially offset by panic buying and

stocking-up, across all countries.

Starbucks:

After initial shutdown of stores across India, TCPL has now opened

~60 stores for delivery and takeaways.

Tata Sampann:

Pulses, spices and condiments, and RTC food business has seen

slight upsurge, mainly due to increase in online buying post imposition of the

lockdown.

The impact of COVID-19 is likely is subside in the medium-to-near term.

30 June 2020

Tata Consumer Products

Exhibit 7: Muted FMCG industry growth

GDP growth

16%

11%

16%

FMCG growth

13%

10%

Household spending

Source: Company, MOFSL

Synergies benefits to kick in and drive all-round growth



In Feb’20, the Tata Group completed the merger of Tata Chemicals’ Consumer

(India foods) business with the erstwhile Tata Global Beverages to form a

holistic F&B company (TCPL) offering multiple products – from consumer staples

to beverages.

The merger offers multiple synergies, including higher outlet coverage, focused

new product development, stronger cash flow generation and scale efficiencies.

TCPL aims to unlock these synergies by integrating the F&B business in India and

using combined resources to achieve rapid growth across segments.

Further, the merger not only gives TCPL a strong brand in

Tata Salt,

but also

synergies of Tata Chemicals’ distribution channel. Besides, it also opens up a

plethora of opportunities for the combined entity in the F&B market with an

addressable size of INR30tn (which is growing at 15%).

The merger also increases contribution of the India business to consolidated

profitability, which we believe provides stability to earnings and would be one of

the factors for re-rating of the stock.

30 June 2020

Tata Consumer Products

Exhibit 8: Change in business dynamics post-merger

Source: Company, MOFSL

Key excerpts on management’s plan to merge the entities and capitalize

synergy benefits

In the upcoming financial year, TCPL will focus on successfully integrating the two

businesses and driving efficiencies and synergies, both for top line and costs within

the Tata Consumer system. The key objectives of the exercise will be to (a) create a

common integrated organization structure, (b) combine and upgrade sales and

distribution network, and (c) maximize synergies and growth opportunities in

existing and new categories.

Strategy for international markets

In the international market, TCPL will remain focused on innovation to build the

non-black tea portfolio and coffee. The company is also closely monitoring costs

across the supply chain to further build efficiencies, which could then be plowed

back into the business to build growth.

30 June 2020

Tata Consumer Products

Exhibit 9: Post-merger combined product offerings

Source: Company, MOFSL

5 STRATEGIC PILLARS TO DRIVE THE NEXT PHASE OF GROWTH FOR TCPL

Rejuvenating base

business



Building

sustainable and

profitable growth

by investing in

core F&B brands



Focusing on

brand building,

premiumization

and distribution



Developing

alternate

channels for

growth

Investing for

Growth



Piloting new

launches and

categories by

leveraging a

differentiated

offering



Adopting

‘right-to-win’

strategy to build a

larger play across

different markets

successfully

Driving

Innovation



Capitalizing on

industry trends to

serve consumer

needs specific to

markets/geograp

hies

Reviewing Portfolio

Options



Realigning capital

investments to

markets/business

es with higher

growth potential



Exploring

additional

avenues for

growth and to

generate

sustainable

returns

Investing in People



Remain

committed to

invest in building

people

capabilities



Creating a

sustainable

high-performance

work culture

30 June 2020

Tata Consumer Products

India beverage business



Resumption of services to bring business back to normalcy

TCPL’s India beverages business, which majorly comprises of Tata Tea, saw

annual revenue/volume growth of 7% each. Revenue increased by 7% to

INR33.8b, whereas EBIT margin contracted by 70bp to 14% (to INR4.7b) in FY20.

Growth can be attributed to focused targeting in the major tea-drinking states

of Uttar Pradesh, Delhi, Punjab and Haryana, making TCPL the second-largest

player in terms of volume and value. Sales of the India branded business grew

7% (excluding India food business for like-to-like comparison) to INR33b.

In FY20, TCPL completed the acquisition of Dhunseri’s branded tea business (‘Lal

Ghoda’

and ‘Kala

Ghoda’).

Post-acquisition, TCPL’s market share is expected to

increase as

Lal Ghoda

is a well-established brand in the state of Rajasthan.

Organically, the company plans to invest in its premium tea brands –

Tata Gold,

Chakra Gold

and

Tata Tea Premium.

In FY20, TCPL also initiated launch of

Tata Tea Tulsi Green Tea

and

Tata Tea

Quick Chai Lite

(3-in-1 tea mix with ‘low sugar’ variant to make boiled tea).

TCPL has initiated its export portfolio comprising

Tata Tea Gold

and

Tata Tea

Premium,

to cater to the south-Asian diaspora living in the UK and other parts of

Europe.

Thus, TCPL’s measures proved beneficial as branded tea volumes in India

increased by 7% in FY20.

Improving retail reach from current level of 2m retail outlets remains TCPL’s key

area of focus.



Indian Beverage industry



India’s tea industry, which is currently valued at INR260b, is dominated by

organized branded players that occupy 65-70% of the market space. Increase in

consumption of Black/Green (currently growing at 3%) tea due to health

benefits is expected to further push tea sales.

Further, re-emergence of tea/coffee cafes in urban areas is expected to

complement growth of beverages’ volumes in the medium-to-near-term.

Exhibit 11: EBITDA recorded CAGR of 9% over FY15-20

EBITDA (INRb)

38%

12%

13%

-13%

12%

Growth (%)

Exhibit 10: India beverages recorded 5% CAGR over FY15-20

Revenue (INRb)

Growth (%)

28.8

FY15

29.9

FY16

30.6

FY17

32.2

FY18

34.3

FY19

36.3

FY20

3.2

FY15

3.6

FY16

3.6

FY17

5.0

FY18

4.4

FY19

4.9

FY20

Source: Company, MOFSL

30 June 2020

Tata Consumer Products

Exhibit 12: EBITDA margin trend

EBITDA (INRb)

12%

Margin (%)

12%

16%

13%

11%

3.2

FY15

3.6

FY16

3.6

FY17

5.0

FY18

4.4

FY19

4.9

FY20

Source: Company, MOFSL

Exhibit 13: TCPL’s major beverage brands in India and internationally

Source: Company, MOFSL

Exhibit 14: Product portfolio of India beverages business

Source: Company, MOFSL

30 June 2020

Tata Consumer Products

India Food business



Tata Salt

and

Tata Sampann

to complement overall growth

In FY20, the India food business recorded 12% revenue growth to INR20.6b.

Growth can be attributed to increase in the salt business along with significant

traction from modern trade/online selling of

Tata Sampann

products.

However, EBIT margins contracted by 410bp to 13% (or INR2.7b), due to

increased focus on expansion activities and new launches across pulses, spices

and other segments.

India’s pulses/spices/RTC markets are valued at INR1,500b/INR600b/INR400b,

with share of organized branded players pegged at 1%/30%/50%. Both pulses

and spices are expected to deliver 15% CAGR as they contribute a major portion

of India’s staple food.

Tata Sampann

saw launches of few more food product categories in the E-

commerce medium, including Nutrimixes (chilla),

poha, chutney,

organic pulses

and

sattu.

Tata Salt

– The Indian salt industry is currently estimated at INR70b, with share

of organized players at ~88% (in volume terms).

Tata Salt

enjoys market

leadership position in the salt segment with ~30% market share in the branded

segment. Current branded sales volumes stand at 1.18MMT.

Tata Salt

volumes are expected to pick up as the company is ramping up

capacity at Mithapur plant from 1MMT to 1.2MMT, which in turn should

increase market share from the current level of ~30%.

Tata Salt

recorded volume growth of 2% to ~1.2MMT in FY20. With new

branding and synergy benefits kicking in from the merger, salt volumes are

expected to improve further.

Shift from unorganized to the organized sector coupled with healthy eating

habits and absence of nationalized branded players in the fray are some of the

growth drivers for the segments.

In FY20, TCPL’s India food business comprising of

Tata Salt and Tata Sampann

saw all-round growth across products, namely in pulses, spices and RTC meals.



Exhibit 15: Product portfolio of India Food business

Source: Company, MOFSL

30 June 2020

Tata Consumer Products

Exhibit 16: Revenue trend of India food business

India Food Business (INRb)

12%

15%

-1%

-6%

11.6

FY13

13.1

FY14

15.0

FY15

16.2

FY16

16.0

FY17

15.1

FY18

18.5

FY19

20.6

FY20

Growth (%)

22%

12%

(*Note: Prior to FY20 India Food business was recorded in Tata Chemicals)

Source: Company, MOFSL

Tata Coffee



Coffee business records strong revenue/EBITDA growth of 9%/32%

Internationally, retail coffee is ~2x the size of tea and is valued at USD88b. The

US is the largest coffee market and is estimated at USD12b. Increasing

premiumization is one of the major growth drivers in the US.

Tata’s coffee business, which comprises India Plantation and overseas business,

saw revenue growth of 9% to INR19.6b in FY20.

Tata Coffee recorded an annual volume growth of 14% on the back of

commercialization of freeze-dried plant in Vietnam, which reached capacity

utilization of ~80% by end-FY20 (within one year of operations). Further,

profitability of the Vietnam plant is bound to increase with increasing utilization

levels.

New launches in the coffee segment includes the premium single-origin coffee

under ‘The

Sonnets’

brand name, launched under 3 variants (Yellow Honey, Red

Honey and Green Honey).

Authentic products and a strong brand name are two key parameters noticed by

consumers before purchasing coffee. Two unique lines of coffee blends under

Eight O’Clock

(Barista Blends and Flavors of America) are believed to be

contributing to incremental growth. Strong and niche brand names, both

domestically and internationally, should boost coffee sales in the medium-to-

near term, in our opinion.

Exhibit 18: …while EBITDA posted slight decline of 1%

EBITDA (INRb)

-2%

-8%

-17%

16.9

FY15

15.5

FY16

16.1

FY17

15.7

FY18

18.0

FY19

19.7

FY20

3.4

FY15

2.8

FY16

3.9

FY17

2.6

-32%

2.4

FY19

-8%

3.2

FY20

38%

Growth (%)

32%



Exhibit 17: Coffee biz reported 3% CAGR over FY15-20…

Tata Coffee (INRb)

Growth (%)

15%

FY18

Source: Company, MOFSL

30 June 2020

Tata Consumer Products

Exhibit 19: Coffee business EBITDA trend

EBITDA (INRb)

24%

20%

18%

17%

16%

Margin (%)

13%

3.4

FY15

2.8

FY16

3.9

FY17

2.6

FY18

2.4

FY19

3.2

FY20

Source: Company, MOFSL

Joint Venture businesses



Starbucks – Impact of lockdown wearing off

According to Euromonitor, the retail market for specialist coffee and tea is

estimated to deliver CAGR of 6.9% over CY19-23E to INR45.4b. ‘Specialist coffee

outlets’ appealing to the urban youth is gaining popularity.

Tata Starbucks,

with

a strong brand name, is expected to benefit the most from the change in

consumer buying behavior.

In FY20, 39 new stores (v/s 30 new stores in FY19) were opened, taking the total

number of stores in India to 185.

Starbucks

saw revenue growth of 21% in FY20

with its presence increasing to 11 cities across India (entered the Ahmedabad,

Surat and Vadodara markets in FY20).

Due to imposition of the lockdown, stores across India were closed, impacting

performance in 4QFY20. However, ~60 stores are now open for deliveries and

takeaways in 10 out of 11 cities where the company is currently present.

Also opening of new stores has been temporarily put on hold. Post

normalization of services, a sharp increase in volumes is expected.

Exhibit 21:

Starbucks

recorded robust 21% revenue CAGR

over FY15-20

186

146

116

1,689

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY15

2,348

FY16

14%

2,672

FY17

3,418

FY18

4,369

FY19

5,306

FY20

Starbucks Revenue (INRm)

39%

28%

21%

Growth (%)



Exhibit 20: 39 new stores added in FY20

Starbucks no. of stores

Source: Company, MOFSL

Tata NourishCo



In May’20, TCPL acquired the remaining 50% stake in NourishCo. TCPL aims to

diversify into carbonated/non-carbonated beverages and other avenues of the

F&B industry.

30 June 2020

Tata Consumer Products



NourishCo reported revenue of INR1.8b; however, volumes were partially

impacted due to imposition of the complete lockdown during the peak months

of Mar-May’20.

Beverages sales are expected to showcase a V-shape recovery in volumes, post

lifting of the lockdown across India.

Increasing electrification along with rise in discretionary spending is expected to

drive sales of beverages in India.

International business

In FY20, international business was stagnant with just 0.4% revenue growth to

INR32.3b on constant currency basis. Further, EBIT margin expanded 260bp to 11%.

This was mainly due to reduction in overall tea consumption across the international

market. Also exit from Czech Republic during the year affected tea sales as well.

TCPL achieved 1%/4% volume growth in the International branded tea/coffee

businesses.

Exhibit 22: Product portfolio of India food business

Source: Company, MOFSL

United States



The US business grew a marginal 1% to INR16.7b. New ethnic range of Tetley in

three new flavors (Masala,

Elaichi

(Cardamom) and Ginger) was launched in the

US and is expected to gain traction in the medium to near term.

In the US, the

Eight O’Clock

brand completed 160 years of existence in FY20; it

clocked 7.4% volume growth during the year.

Further, TCPL has launched a new line of products under the

Eight O’Clock

brand

– Barista Blends and Flavors of America – with a differentiated packaging.

Stocking-up of pantries due to COVID-19, complemented sales of

Tetley

and

Eight O’Clock

in the US, along with an increase in online sales.

A new coffee brand ‘Early

Riser’

Eight O’Clock

– in the ‘Can’ segment – has

been launched in different parts of the US’ West Coast.

30 June 2020

Tata Consumer Products

Eight O’Clock



In FY20,

Eight O’Clock

was ranked the #4 ‘roasted and ground’ coffee brands in

the US.

During the year,

Eight O’Clock

launched two new lines, Barista Blends and

Flavors of America.

Eight O’Clock’s

revenue growth was partially offset by underperformance in ‘K-

cup’ sales and improvements in private labels.

Exhibit 23:

Eight O’Clock

product portfolio

Source: Company, MOFSL

Canada



Imposition of lockdown due to COVID-19 resulted in panic buying in Mar’20. This

inflated total tea sales, leading to double digit revenues in the last quarter.

Consequently, annual revenue grew 6% while corresponding market share

increased to ~30% (in value terms).

In Canada, TCPL launched

Supers 2.0.

In FY20,

Supers 2.0

recorded monthly

share of ~3.9% in the non-black tea category.

Further,

Tetley Cold Infusions

range of teas launched in Canada is expected to

cater to the growing trend of health and wellness among the populace.

The UK reported revenue decline of 2% to INR11.2b in FY20.

New product launch –

Cold Infusion

in the UK is fructifying. As a result, revenue

contribution inched up to 1% with market share of 21.3% (in Everyday black),

despite increased competition. Further the overall category is growing at ~25%

despite seasonality in the business.

TCPL’s increased online presence coupled with higher online purchases due to

COVID-19, led to higher performance of

Tea Pigs.

With legacy of over 180 years,

Tetley is

now the #2 branded tea globally. It is

currently ranked as #1 and #3 in Canada and the UK, respectively.

Further, company also introduced a new 440s decaf pack count to enable

further growth in the out-of-home category.

United Kingdom



Tetley



Exhibit 24:

Tetley’s

product portfolio

Source: Company, MOFSL

30 June 2020

Tata Consumer Products

Exhibit 25: Revenue by geographical market (INRb)

Revenue by Geographical Market (INRb)

India

USA

United Kingdom

Rest of the World

Revenue from External Customer

FY19

39.0

16.5

11.4

5.6

72.5

FY20

61.8

16.7

11.2

6.7

96.4

YoY Growth

58%

-2%

20%

33%

Source: Company, MOFSL

Exhibit 26: Operating overseas subsidiaries – losses (INRm)

INR m

Zhejiang Tata

Suntyco

Czech Republic

Good Earth

Earth Rules

Place of operation

China

Russia

Czech Republic

Australia

FY15

-421

-119

-147

FY16

-153

-65

-149

-270

FY17

-204

-526

-50

-212

-121

FY18

-553

-42

-178

-72

FY19

-80

-47

-168

-79

FY20

-107

-48

Remarks

Sold

Source: Company, MOFSL

Exhibit 27: Segment revenue (INRb)

Branded Business

India - Beverages

India - Foods*

International - Beverages

Total Branded Business

Non-branded Business

Total Segments Revenue

Others

Less: Inter-segment Revenue

Revenue from external customers

FY19

31.7

18.5

32.4

64.1

8.4

72.5

0.3

-0.3

72.5

FY20

33.8

20.6

32.3

86.7

9.7

96.4

0.3

-0.3

96.4

YoY Gr. %

-12

(*Note: Prior to FY20 India Food business was recorded in Tata Chemicals)

Source: Company, MOFSL

Exhibit 28: Segment results (INRb)

Branded Business

India - Beverages

EBIT margin (%)

India – Foods*

EBIT margin (%)

International - Beverages

EBIT margin (%)

Total Branded Business

EBIT margin (%)

Non-branded Business

EBIT margin (%)

Total Segments Results

Add/ Less:

Other Income

Finance cost

Unallocable items

Exceptional items

Profit before Income Tax

FY19

4.6

14%

3.1

17%

2.8

7.3

11%

0.7

8.0

1.1

-0.5

-0.9

-0.3

7.3

FY20

4.7

14%

2.7

13%

3.6

11%

10.9

13%

0.6

11.5

0.9

-0.8

-2.7

8.1

YoY Gr. %

-15

-16

-12

(*Note: Prior to FY20 India Food business was recorded in Tata Chemicals)

Source: Company, MOFSL

30 June 2020

Tata Consumer Products

Financial highlights



Strong operating cash flow generation

TCPL has maintained average annual run-rate of FCFF at INR2.9b over FY16-20.

Post-merger, FCFF has increased to INR9.3b in FY20 v/s outflow of INR0.4b in

FY19.

TCPL has maintained positive CFO for more than a decade with average run-rate

of INR5.1b/INR3.9b in the last 5/10 years. Going forward, this strong run-rate is

expected to continue.

Post-merger, operating cash flow grew by 4.2x YoY to INR10.8b in FY20 (v/s

INR2.5b in FY19), attributable to higher operating profit (from both, existing and

new business) and increased inflow from working capital.

Corresponding net cash increased to INR12.7b in FY20 (v/s INR4.8b in FY19).

This gives enough headroom for TCPL to pursue expansions and branding of its

newly diversified consumer portfolio.

Exhibit 30: Net debt to equity

9,322

6,030

0.0

2,180

2,386

-0.1

-64

FY13

FY14

FY15

-385

FY16

FY17

-32

FY18

-429

FY19

FY20

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

-0.1

0.1

Debt-to-equity



Exhibit 29: FCFF

FCFF (INRm)

Source: Company, MOFSL

Return ratios



Post-merger, RoCE reduced by 210bp from 10.2% in FY19 to 8.1% in FY20. This is

mainly due to addition of ‘Goodwill and brands (indefinite life)’, after merging

the India food business (namely

Tata Salt

and

Tata Sampann)

with TCPL.

However, after adjusting assets for ‘Goodwill and brands (indefinite life)’ which

saw sharp increase of ~2.5x from INR37.8b in FY19 to INR94.2b in FY20, RoCE

jumped 660bp – from 22.1% in FY19 to 28.7% in FY20.

In the past 5 years, TCPL has maintained average consolidated RoCE of 8.6%,

whereas standalone RoCE for the same period stood at 12.7%. Correspondingly,

average consolidated RoIC in the last 5 years stood at 10.4% v/s standalone RoIC

of ~47% for the same period.

Further, as per the accounting policy, Goodwill will be tested for impairment

and necessary adjustments will be made. Going forward, tangible capital

employed (excl. Goodwill) is improving and should continue its growth

trajectory.

RoIC for the India business is in the range of 40-45%, in line with other players.

However, International business remains a key focus area where RoIC is lower

compared to the India business.

30 June 2020

Tata Consumer Products

Exhibit 31: RoCE

RoCE

10.6

9.1

8.8

9.0

9.4

8.6

8.5

7.4

Exhibit 32: RoE

RoE

7.8

5.6

6.1

6.9

7.6

6.7

Source: Company, MOFSL

Exhibit 33: RoCE profile (post-merger)

Particulars (Figures in INRb)

Total Equity

Goodwill and Brands (Indefinite life)

Fixed Assets and other intangibles

Working Capital (Net)

Operating Capital Employed

Other Non-operating Assets (mainly Investments)

Net (Debt)/Cash & Cash Equivalents#

Total Assets

ROE % (Group Net Profit / Equity)

ROCE % (EBIT / Operating CE)

ROCE % (excluding Goodwill and Brand with indefinite life)

FY19

FY20

149

131

149

5.5%

3.1%

10.2%

8.1%

22.1%

28.7%

Source: Company, MOFSL

Gross margin



Gross margin have gradually reduced from 52% in FY13 to 45% in FY19. Post-

merger of India Food business with TCPL, gross margin dropped by 88bp to 44%

in FY20.

Exhibit 34: Gross margin trend

52%

Gross Margins

47%

46%

45%

44%

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

Source: Company, MOFSL

Working capital



TCPL’s net working capital (WC) days has declined from its 5-year average of 76

days over FY15-19 to 64 days in FY20.

During the year, inventory increased by just 6%, way lower than account

receivables/payables, which increased 36%/42%. However, inventory days

reduced significantly by 16 days to 65 days. Net increase in receivables/payable

days was a mere 1/3 days to 35/36 days. Post-merger of the India food business

with TCPL, the overall working capital days reduced from 82 to 64 days.

30 June 2020

Tata Consumer Products



Post-merger, WC cycle should improve with synergy benefits kicking in,

especially with the newly launched

Tata Sampann

leveraging the distribution/

retail network of

Tata Salt, Tata Tea

and other brands of the consolidated

entity.

Exhibit 36: WC days

Exhibit 35: Inventory/Receivables and Payables days

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

Source: Company, MOFSL

Cost Structure



EBITDA margins post-merger improved by 260bp to 13.4% with absolute EBITDA

at ~INR13b.

RM cost reported slight growth of 90bp to 56% (as % of sales). Other items i.e.

employee expense/advertisement and sales charges/other expenses declined by

190bp/50bp/100bp.

Freight cost more than doubled from INR1.9b in FY19 to ~INR4b in FY20.

Post-merger, cost dynamics are expected to improve as

Tata Sampann

and

other new businesses leverage the existing network of TCPL’s tea and salt

businesses. This will happen without the incremental cost of setting up a new

distribution/retail channel network.

Exhibit 38: Cost structure in FY20 (post-merger)

Other

expenses,

14%

Adv. and

sales

charges, 7%

RM, 55%

Employee

expense,

RM, 56%

Exhibit 37: Cost structure in FY19

Other

expenses,

15%

Adv. and

sales

charges, 8%

Employee

expense,

11%

Source: Company, MOFSL

Employee cost and salaries



Post-merger, percentage increase for all employees was 10.16% (v/s. 7.4% in

FY19).

Average percentage increase made in salaries of employees other than

managerial employees in FY20 was 8.9% (v/s 8.8% in FY19). Increase in

managerial remuneration for FY20 stood at 10.25% (v/s 1.5% in FY19).

The percentage increase in median remuneration was 57% for FY20 (v/s 11% in

FY19), reflecting the impact of employee addition from the food business.

Number of employees on rolls stood at 2,689 for FY20 (v/s 2,409 in FY19).

30 June 2020

Tata Consumer Products

Financials and valuations

Consolidated Income Statement

Y/E March

Net Sales

Change (%)

Gross Profit

Margin (%)

Other operating exp.

EBITDA

Margin (%)

Depreciation

Net Interest

Other income

PBT before EO

EO income/(exp.)

PBT after EO

Tax

Rate (%)

Reported PAT

Minority and Associates

Adjusted PAT

Change (%)

Balance Sheet

Y/E March

Share Capital

Reserves

Net Worth

Minority Interest

Loans

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Capital WIP

Goodwill & Intangibles

Investments

Curr. Assets

Inventories

Account Receivables

Cash and Bank Balance

Others

Curr. Liability & Prov.

Account Payables

Other liabilities

Provisions

Net Curr. Assets

Def. tax liability

Appl. of Funds

2016

66,365

-17.0

30,149

45.4

23,606

6,543

9.9

1,168

1,169

820

5,026

-3,329

1,698

2,000

117.8

-302

-247

3,274

-13.3

2017

67,796

2.2

32,180

47.5

24,269

7,911

11.7

1,260

915

831

6,566

6,619

1,983

30.0

4,636

742

3,841

17.3

2018

68,154

0.5

31,160

45.7

22,771

8,389

12.3

1,160

428

942

7,743

-211

7,531

1,859

24.7

5,673

717

5,167

34.5

2019

72,515

6.4

32,439

44.7

24,579

7,859

10.8

1,226

525

1,571

7,680

-333

7,347

2,609

35.5

4,738

656

4,415

-14.6

2020

96,374

32.9

42,267

43.9

29,346

12,921

13.4

2,417

779

1,116

10,842

-2,748

8,094

2,742

33.9

5,352

754

7,345

66.4

2021E

1,04,243

8.2

45,403

43.6

30,836

14,567

14.0

2,503

769

1,060

12,355

3,459

28.0

8,896

365

8,531

16.1

(INR Million)

2022E

1,14,761

10.1

49,786

43.4

32,847

16,939

14.8

2,577

769

1,113

14,707

4,118

28.0

10,589

240

10,349

21.3

(INR Million)

2022E

922

1,49,140

1,50,061

10,933

9,325

1,70,320

62,611

23,903

38,708

954

73,338

4,297

79,299

23,581

10,916

30,438

14,364

23,243

11,883

8,603

2,756

56,056

3,033

1,70,320

2016

631

61,841

62,472

8,618

13,541

84,630

24,033

14,511

9,523

394

37,096

11,926

40,009

16,290

5,924

6,744

11,051

13,532

6,773

2,776

3,983

26,477

786

84,630

2017

631

62,024

62,655

9,195

7,866

79,716

23,711

13,650

10,060

632

34,979

13,534

36,309

14,530

5,925

7,412

8,444

14,345

7,378

3,389

3,578

21,965

1,454

79,716

2018

631

69,685

70,316

10,090

10,676

91,082

25,424

15,181

10,244

1,352

37,235

6,431

49,343

14,483

6,483

18,067

10,310

13,525

7,057

3,562

2,906

35,818

-3

91,082

2019

631

72,686

73,317

10,277

11,283

94,877

27,689

16,407

11,282

4,244

37,851

6,045

49,385

16,099

6,806

16,168

10,313

12,887

6,649

4,221

2,017

36,498

1,043

94,877

2020

922

1,37,227

1,38,149

10,925

11,825

1,60,898

59,111

18,824

40,288

954

73,338

4,893

65,258

17,120

9,224

24,550

14,364

20,799

9,440

8,603

2,756

44,459

3,033

1,60,898

2021E

922

1,42,440

1,43,362

10,929

11,825

1,66,115

60,611

21,326

39,285

954

73,338

4,532

73,193

21,420

9,916

27,494

14,364

22,154

10,794

8,603

2,756

51,040

3,033

1,66,115

30 June 2020

Tata Consumer Products

Financials and valuations

Cash flow statement

Y/E March

EBITDA

Prov. & FX

Others

Direct taxes (net)

CF from Op. Activity

Capex

FCFF

Interest/dividend

Investments in subs/assoc.

Others

CF from Inv. Activity

Borrowings

Finance cost

Dividend

Others

CF from Fin. Activity

(Inc)/Dec in Cash

Opening balance

Closing balance (as per B/S)

Ratios

Y/E March

Basic (INR)

EPS

Cash EPS

BV/Share

DPS

Payout (%)

Dividend yield (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

FCF per share

Return Ratios (%)

RoE

RoCE

RoIC

Working Capital Ratios

Fixed Asset Turnover (x)

Asset Turnover (x)

Debtor (Days)

Creditor (Days)

Inventory (Days)

Leverage Ratio (x)

Debt/Equity

2016

6,543

-132

-2,719

-190

-2,342

1,160

-1,545

-385

697

-509

4,273

2,917

-796

-663

-1,871

512

-2,818

1,259

5,485

6,744

2017

7,911

1,485

100

-2,106

7,412

-1,382

6,030

574

-280

2,503

1,415

-4,848

-615

-1,890

-805

-8,158

668

6,744

7,412

2018

8,389

-14

-1,389

-438

-2,992

3,556

-3,588

-32

485

373

10,133

7,403

2,160

-282

-2,118

-65

-304

10,655

7,412

18,067

2019

7,859

-2,347

-333

-2,609

2,571

-3,000

-429

1,571

-1,429

-525

-1,893

-623

-3,041

-1,899

18,067

16,168

2020

12,921

-649

1,292

-2,742

10,822

-1,500

9,322

1,116

-384

-779

-2,986

1,709

-2,056

8,382

16,168

24,550

2021E

14,567

-3,637

-3,459

7,470

-1,500

5,970

1,060

-440

-769

-3,318

-4,086

2,944

24,550

27,494

2022E

16,939

-2,072

-4,118

10,749

-2,000

8,749

1,113

-887

-2,500

-769

-3,650

-6,918

2,944

27,494

30,438

2016

3.6

4.8

67.8

2.3

1.9

108.9

80.3

5.7

5.1

52.1

1.9

-0.6

5.6

7.6

8.2

7.0

0.8

0.1

2017

4.2

5.5

68.0

2.3

30.6

1.5

92.9

69.9

5.7

5.0

43.1

1.5

9.6

6.1

9.0

10.6

6.7

0.9

0.0

2018

5.6

6.9

76.3

2.4

26.1

0.9

69.0

56.4

5.1

5.0

40.6

0.9

-0.1

7.8

9.4

11.7

6.7

0.7

-0.1

2019

4.8

6.1

79.6

2.5

33.3

1.2

80.8

63.2

4.9

4.7

43.4

1.2

-0.7

6.1

8.6

9.8

6.4

0.8

-0.1

2020

8.0

10.6

149.9

2.7

46.5

0.9

48.6

36.5

2.6

3.5

26.4

0.9

10.1

6.9

8.5

11.5

2.4

0.6

-0.1

2021E

9.3

12.0

155.6

3.0

31.1

1.4

41.8

32.3

2.5

3.3

23.4

1.4

6.5

6.1

7.8

10.2

2.7

0.6

-0.1

2022E

11.2

14.0

162.8

3.3

28.7

1.6

34.5

27.6

2.4

3.0

20.1

1.6

9.5

7.1

9.1

10.7

3.0

0.7

-0.1

30 June 2020

Tata Consumer Products

Explanation of Investment Rating

Investment Rating

Expected return (over 12-month)

BUY

>=15%

SELL

< - 10%

NEUTRAL

< - 10 % to 15%

UNDER REVIEW

Rating may undergo a change

NOT RATED

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within

following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.

Disclosures

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the

Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial

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available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a

registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and

National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National

Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance

Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.

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MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and

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specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even

though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report

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https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx

A graph of daily closing prices of securities is available at

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Research Analyst views on Subject Company may vary based on Fundamental

research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated

from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.

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This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability

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to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these

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located in Hong Kong & are not conducting Research Analysis in Hong Kong.

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Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under

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"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which

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In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets

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Specific Disclosures

1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.

2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company

3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months

4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report

5 Research Analyst has not served as director/officer/employee in the subject company

6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months

8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months

30 June 2020

Tata Consumer Products

9 MOFSL has not received any compensation or other benefits from third party in connection with the research report

10 MOFSL has not engaged in market making activity for the subject company

********************************************************************************************************************************

The associates of MOFSL may have:

financial interest in the subject company

actual/beneficial ownership of 1% or more securities in the subject company

received compensation/other benefits from the subject company in the past 12 months

other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on

the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL

even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.

acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the

company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)

received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.

The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report

Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not

consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from

clients which are not considered in above disclosures.

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the

research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

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customers by virtue of their receiving this report.

Disclaimer:

The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or

distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for

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in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.

The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment

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expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade

securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of

the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and

should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make

modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from

time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to

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separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of

information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or

may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,

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Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;

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Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:

INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company

Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth

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a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.

Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.

Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no

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* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National

Company Law Tribunal, Mumbai Bench.

30 June 2020