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Bloomberg's TATA Assessment: Correct Conclusion, Constrained Content

Photo of Haldiram's Snacks

Recently, Bloomberg published, in an article titled "An Old Indian Conglomerate Seeks the Elusive Elixir of Growth", an analysis of how Haldiram's is not the right bet, but its digital focus on TATA Neu is the growth that TATA needs. This once again shows another Western media's, in this case - Bloomberg, complete lack of understanding of the Indian market and the enormous potential about to be unleashed.

Bloomberg's TATA Assessment: Tata’s potential acquisition of Haldiram’s is a step in the right direction for looking at growth in India’s consumer markets. A top publication published a piece stating “The Tata Group has denied speculation that it is in talks to buy a stake in snack-food maker Haldiram’s. That’s just as well. The 155-year-old Indian conglomerate needs to work up an appetite for something a little more substantial — and modern” & “The Tata Group needs the elixir of growth, and not a snack-maker’s cash flows”, thereby showing a complete lack of understanding of the Indian market and the gargantuan potential about to be unleashed.

Investing in semiconductor technology, chips and foundries is as much a future as India’s consumer markets, and surely one doesn’t preclude the other. Thinking of Haldiram’s as a “snack makers” cash flows surely does preclude an understanding of India’s consumer markets.

Here’s why betting on the large Indian consumer market plays matter. Haldiram’s holds massive potential with its intrinsic value and value unlocking potential:

  1. Asset Scarcity - Haldiram’s given its revenue and EBITDA is one of a few valuable assets that can be scaled and improved to generate returns. The replacement cost for creating assets at such a scale in India is immense.

  2. The Indian Middle Class Potential - The spending power of the 500 Million Indian middle class is to be unleashed upon the markets. Assets such as Haldiram’s stand to benefit immensely.

  3. Value Creation Potential - Haldiram’s and its limited growth is highlighted. We pointed out in detail in our ET article here of just how much value creation potential Haldiram’s has. The current ownership and management needs to make way for partners who can unleash value through capital allocation, financial engineering and world-class franchising strategy.


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