Shares of Tata Coffee Ltd jumped around 4 percent after they proposed a merger with the parent company Tata Consumer Products Ltd (TCPL). The shares have delivered more than 40 percent return to its shareholders on a YTD basis.
With a market capitalisation of Rs. 5,966 crores, the shares of Tata Coffee Ltd started Friday’s trading session on a higher note at Rs. 312 and currently trade at Rs. 319.75 apiece. The shares hit an intra-day high of Rs. 322.45, gaining around 4 percent, which is also recorded as the company’s 52-week high mark.
Such a bullish movement in the share price was observed after the company, in an exchange filing, announced that they would merge with the Parent Company i.e., Tata Consumer Products Ltd (TCPL). Following the merger, Tata Coffee Ltd will dissolve without winding up from January 1, 2024, onwards.
Simultaneously, Tata Coffee’s plantation unit will be demerged and amalgamated into another Tata group unit TCPL Beverages and Food.
To summarize, the plantation business of Tata Coffee will be demerged into TCPL Beverages and Foods, and the remaining business of TCL, consisting of its extraction and branded coffee business, will be merged with TCPL.
According to the exchange filing published by TCPL on December 15, 2023, under the reorganisation scheme, TCPL shall issue and allot equity shares in two tranches, firstly, as per the share entitlement ratio, TCPL will issue one equity share for every 22 equity shares held in Tata Coffee to existing shareholders for consideration of demerger.
Secondly, as per the share exchange ratio, TCPL will issue 14 shares for every 55 equity shares held in Tata Coffee to the existing shareholders for consideration of amalgamation. Such shares would be credited as on the record date.
The Record Date for the company to determine the shareholders of Tata Coffee Ltd who will be eligible to receive shares in Tata Consumer Products, which will be allotted according to the demerger and the amalgamation, is January 15, 2024.
The company’s aim to generate synergies and efficiencies included a reorganization plan that included the proposal to integrate all of Tata Coffee’s businesses with Tata Consumer Products.
Coming onto the company’s financial statements, the revenue decreased marginally around 1 percent from Rs. 701 crores during the June quarter to Rs. 696 crores in the September quarter. On a contrasting note, the net profits increased by 3 percent from Rs. 62 crores to Rs. 64 crores during the same timeframe.
Headquartered in Bangalore, Tata Coffee Ltd is primarily engaged in the production, trading and distribution of Coffee and Tea and Allied products. The group has operations in India, USA, CIS countries, Europe, Africa and Vietnam.
Written By Vaibhav Patil
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