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Tata Tea 3QFY01 net declines 24% - Views on News from Equitymaster
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  • Jan 22, 2001

    Tata Tea 3QFY01 net declines 24%

    Tata Tea Limited has reported a steep 49% decline in its net profit to Rs 165 m in the quarter ended December 31, 2000. The decline in profits was on the back of a 14% decline in net sales turnover to Rs 2,016 m.

    (Rs m) 3QFY00 3QFY01 Change 9m FY00 9m FY01 Change
    Net Sales Turnover 2,330 2,016 -13.5% 6,778 6,216 -8.3%
    Other income 125 5 -96.4% 258 373 44.3%
    Profit after Tax/(Loss) 325 165 -49.4% 1,048 912 -13.0%
    Profit after Tax            
    (excluding extraordinary income) 218 165 -24.4% 893 634 -29.0%
    Net profit margin (%) 9.3% 8.2%   13.2% 10.2%  
    No. of Shares (eoy) (m) 48.6 56.2   48.6 56.2  
    Diluted no. of shares 56.2 56.2   56.2 56.2  
    Earnings per share*       21.2 15.0  
    Current P/e ratio         18.3  

    However, other income in 3QFY01 does not include extraordinary income unlike the corresponding quarter in the previous year (3QFY00). Other income in 3QFY00 represented Rs 125 m as profit arising from sale of ACC Shares. If we exclude this extraordinary income, then the net profit actually declined by 24% during 3QFY01 (and not 49%).

    On a nine month consolidated basis, the company’s turnover declined by 8% and the net profit by 29% (excluding extraordinary income). The decline in turnover has come in the wake of declining tea prices, as well as a downturn in demand from Russia.

    The company’s increased debt burden has resulted in a jump in interest costs, thus adversely affecting the bottomline.

    The Tata Tea stock closed at Rs 275, P/e multiple of 18.3 times its annualised nine months FY01. The stock has seen an upsurge in the last couple of months as tea prices were beginning to harden. In light of the above results however, a decline in the short term cannot be ruled out.



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