Tata Global Beverages (TGBL) reported muted Q1FY17 sales whereas it performed ahead of our expectations on operational & earnings front. Sales grew 3.8% YoY to | 1711.5 crore (I-direct estimate: | 2125.2 crore) on the back of YoY growth of 20.8% & 17.1% in coffee segment & non branded business respectively. However, tea segment declined by 1.3%. TGBL reported Q1FY17 results as per Ind AS, which led to promotional expenses being netted off from sales, thus resulting in lower topline in absolute terms . EBITDA margins improved 283 bps to 13.8% (I-direct estimate: 8.8%) driven by lower advertising spend (down 247 bps as percentage of sales) & benign commodity cost (down 103 bps as percentage of sales). PAT increased by 51.9% YoY to | 119.5 crore (I-direct estimate: | 89.5 crore) led by higher EBITDA. ICICI Securities Limited value the stock on an SOTP basis arriving at a target price of | 147 & maintain HOLD rating.