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Business News/ Companies / News/  Starbucks’ impact on Tata Global overstated-Morgan Stanley
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Starbucks’ impact on Tata Global overstated-Morgan Stanley

The firm downgrades the stock to ‘underweight’ from ‘equal weight’

Starbucks founder and chief executive Howard Schultz at the opening of India’s first Starbucks store at in south Mumbai on 19 October. Photo: Abhijit Bhatlekar/Mint (Abhijit Bhatlekar/Mint)Premium
Starbucks founder and chief executive Howard Schultz at the opening of India’s first Starbucks store at in south Mumbai on 19 October. Photo: Abhijit Bhatlekar/Mint
(Abhijit Bhatlekar/Mint)

Shares in Tata Global Beverages Ltd fall 4.12% after Morgan Stanley downgrades the stock to “underweight" from “equal weight". Tata Global shares have nearly doubled this year, partly on hopes about its outlook as the joint venture (JV) partner of Starbucks, which has opened three coffee shops in India this year.

However, Morgan Stanley says the contribution from the Starbucks JV will be limited and recommends booking profits on Tata Global.

“The business suffers from poor earnings visibility, weak brand/market positioning, a lack of pricing power, sluggish revenue growth and mediocre return ratios," Morgan Stanley says about Tata Global in a note dated on Monday.

Morgan Stanley also adds: “Structurally this is one of the weakest businesses in our coverage universe."

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Published: 19 Nov 2012, 01:16 PM IST
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