Starbucks India’s Plan To Reach 1,000 Stores By FY28: ICICI Securities

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ICICI Securities Report

Our analysis of Tata Starbucks financials over FY14-24 indicate-

1. It had revenue compound annual growth rate of 29% over FY14-24 and store count CAGR of 26%. The revenue/store has remained flat at ~Rs 35 million.

2. The gross margins of Tata Starbucks and Starbucks Corporation are similar at ~67%. We believe Tata Starbucks can potentially reach >20% Ebitda margin (Starbucks Corporation Ebitda margin: ~18%) and

3. Tata Starbucks plans to reach 1,000 outlets by FY28 (421 in FY24).

Plan appears ambitious, probably triggered by-

1. vacuum caused by partial exit of Cafe Coffee Day (though Tata Starbucks is far more premium positioned) and

2. rise of new chains (Blue Tokai, Third Wave etc).

We model EV of Tata Starbucks at Rs 211 billion (Ebitda multiple of 24 times). In Tata Consumer Products Ltd.'s SoTP, we attribute Rs 91/share for Tata Starbucks.

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