TGB-Tata Chemicals deal is good news for stocks, say analysts

The move to merge their consumer businesses will unlock opportunity for both companies and may potentially result in an upside of 50% for Tata Chemicals

The Street welcomed the Tata group’s strategic decision to put the long-awaited consumer business under one roof, by merging Tata Chemicals’ (TCL) foods and detergent business with Tata Global Beverages (TGBL; to be renamed as Tata Consumer Products). 

Shares of these two entities surged 8-11 per cent on Thursday. The expected valuation and growth upside from this deal has enthused investors, given these two entities (before deal announcement) have relatively subdued valuation at present.

A close look at the revised valuation matrix of TCL shows that the valuation of its non-consumer businesses indicates 52 per cent upside in the stock. 

According to analysts