Tata Coffee Limited : 532301 (FV : Rs 1) : A value pick at CMP of Rs 130-132 one year target price Rs180

Tata Coffee is coffee company owned by the Tata Group. The company owns 19 coffee estates in southern India. The estates are spread across the districts of Coorg, Chikmagalur, and Hassan in Karnataka and Valparai district in Tamil Nadu

Tata Coffee is subsidiary of Tata global beverages. It is Asia’s largest coffee plantation company and one of the largest exporter of instant coffee.TCL produces more than 10000MT shade grown Arabica and Robusta. It’s two instant coffee manufacturing have combined installed capacity of 8400MT.It exports green coffee to countries in Europe,Asia,Middle east and North America

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TCL has recently set up freeze dried coffee plant in Vietnam which aims to produce 5000MT coffee,which would further add and increase the production capacity by 50% in coming years.

TCL is expected to deliver flat performance this year and expected EPS for FY 17-18 is around 8. Forgetting growth stock of this excellent FMCG company is availiable at PE multiple of around 16 which is cheaper in comprision to othe FMCG companies,Technically stock looks bottom out.

CMP of 130-132 are very attractive level to invest downside risk looks limited,stronger USD ,increasing domestic demand of instant coffee should help in improving the revenue and margins going forward. PE expansion from 16- 20 and a 10% growth in EPS can easily take the stock price to 180 in one year time frame.

Long term investor can safely buy this stock for target of Rs 180 .