Analysts believe revenue growth opportunities lie in the unorganised tea segment, which accounts for about a third of the domestic tea market. Further, its focus on premiumisation is also expected to support growth, according to Siddhartha Khemka of Motilal Oswal Financial Services.
The addition of consumer business will expand its product portfolio and revenue base. The company plans to consolidate its position in the salt business and add to its range in spices, pulses, liquid beverages, and packaged food.
The experience of the incoming Managing Director and Chief Executive Officer Sunil D’Souza could help the company scale up portfolio across the fast-moving consumer goods categories it is operating in.
While the coffee business is going through near-term challenges, with coffee prices at multi-year lows, the commissioning of the Vietnam plant is expected to boost capacity and add to its earnings. For the Starbucks
JV, store expansion and higher gross margins are expected to improve profitability.
While the stock is up 58.5 per cent, analysts believe it has more steam left, driven by higher growth in the Indian market. Synergies with the new consumer business and cost-control efforts are expected to add to margins and cash flows.