On September 6, reports surfaced indicating that Tata Consumer Products was in discussions to acquire a 51 percent stake in Haldiram’s, although they were reportedly uncomfortable with the $10 billion valuation Haldiram’s had sought. Both companies have since denied any ongoing negotiations.
While Tata Consumer Products and Haldiram’s have refuted the acquisition reports, it raises a critical question: Is Haldiram’s genuinely worth $10 billion?
Industry experts suggest that Haldiram’s product line would complement Tata Consumer Products’ portfolio, which currently lacks such food and snack offerings. However, doubts have arisen regarding the $10 billion valuation.
On September 6, Reuters reported that Tata Consumer Products was in discussions to acquire a 51 percent stake in Haldiram’s but expressed concerns about the $10 billion valuation requested by Haldiram’s.
Tata Consumer Products promptly denied the reports through an official exchange filing, asserting that they were not engaged in any such deal negotiations. Haldiram’s, in an interview with CNBC-TV18, also denied being in talks with Tata Consumer.
In April, the Competition Commission of India approved the demerger of the FMCG businesses of Haldiram Foods International Private Limited and Haldiram Snacks Private Limited into a new entity named Haldiram Snacks Foods.
Analysts believe that it was this combined entity that Tata Consumer Products was interested in acquiring.
Haldiram Foods International Private Limited reported a revenue of Rs 3,622 crore in FY22, while Haldiram Snacks Private Limited reported a revenue of Rs 5,248 crore in the same period. The combined entity’s revenue amounted to Rs 8,870 crore.
This valuation suggests that Haldiram’s is valued at 10 times its annual sales, which totals around Rs 83,000 crore, according to analysts. Some industry experts believe that a $10 billion valuation for Haldiram’s is excessive. “A $10 billion valuation is high, and it is not justified for Haldiram’s,” commented an analyst from a foreign brokerage firm, speaking anonymously.
Tata Consumer Products has limited offerings in the snacking segment, apart from Soulfull’s ragi bites and protein bars. Acquiring Haldiram’s would have been a valuable addition to their portfolio, according to the foreign brokerage analyst. Building a comparable portfolio from scratch would have been a challenging task for the Tata Group company.
Haldiram’s holds a dominant position in the Indian ethnic and snacks industry, commanding a 38.5 percent market share. As of FY22, this industry was valued at Rs 114 billion, with expectations of reaching Rs 204 billion by FY26, as per Bikaji Foods’ red herring prospectus. It’s worth noting that Bikaji Foods, which went public in November 2022, and Haldiram’s belong to the same family group. While Bikaji Foods has a presence in Rajasthan, Assam, and Bihar, Haldiram’s has a nationwide presence, with a significant presence in New Delhi.
Tata Consumer Products’ stock experienced a 2.72 percent decline on September 7, retracting gains made in the previous day’s trading session following the company’s denial of any negotiations with Haldiram’s.