Tata Consumer Products gains 3% on report Group could buy Big Basket

Tata Consumer ProductsTata Consumer Products rose 2.7 per cent in a weak market to Rs 645.5 on the BSE on Wednesday on the report that the Tata Group is in the final stages of acquiring a majority stake of 68 per cent in Supermarket Grocery Supplies, which runs and operates online grocery brand BigBasket.

The deal, which is expected to close in the next four to five weeks, will give exit to investors Alibaba, Abraaj Group and IFC. The top management, including co-founder and CEO Hari Menon, will continue to stay on board, the report added.

“The deal worth Rs 9,300-9,500 crore — biggest in the online grocery space so far—values BigBasket at Rs 13,500 crore (around $1.85 billion). This comes about 20 months after the Hari Menon-led Bengaluru company had entered the unicorn club (companies with a valuation of at least $1 billion),” it said.

The acquisition of BigBasket fits the Tata Group’s plans for serious online play. Tata Sons Chairman N Chandrasekaran has in the recent past talked about the group’s ambitions to have a super app.

“BigBasket has created a significant presence in the online space that has got certified further in the past 12 months. For Tatas to make a transition from a physical to a digital space, an inorganic route makes more sense,” said analyst and chief executive of Third Eyesight Devangshu Dutta. This transaction would allow conglomerate access to a large customer base.

According to a RedSeer and BigBasket report, the total size of the e-grocery market in the country is expected to grow from $1.9 billion in 2019 to $3 billion by the end of 2020. At an annual growth rate of 57 per cent, it is expected to touch $18 billion by 2024.

At 10:05 am, the stock was quoting 1 per cent higher at Rs 635 on the BSE, as against a 0.7 per cent decline in the benchmark S&P BSE Sensex. Other Tata Group stocks, however, were trading mixed. Tata Power, Tata Coffee, and Indian Hotels were up between 0.17 per cent and 1 per cent, while Tata Motors, Tata Steel, Tata Chemicals, TCS, and Tata Communication dipped up to 1.5 per cent.