Tata Tea: Poor blend in 1HFY01 - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Tata Tea: Poor blend in 1HFY01

Nov 1, 2000

Tea major, Tata Tea Limited, has declared a minor 2% drop in turnover in 2QFY01. However, a 52% drop in its other income and a 53% surge in its net interest has resulted in a 22% decline in its bottomline.

(Rs m)2QFY002QFY01Change1HFY001HFY01Change
Other Income13263-52.3%133368176.4%
Operating Profit (EBDIT)595593-0.4%1,078834-22.7%
Operating Profit Margin (%)25.7%26.1% 24.2%19.8% 
Interest (Net) 335053.1%8310931.0%
Profit before Tax646557-13.8%1,033994-3.8%
Profit after Tax/(Loss)462361-22.0%7237473.3%
Net profit margin (%)20.0%15.8% 16.3%17.8% 

Tata Tea is the largest integrated producer of tea in the world with a market share of 23%. It cultivates tea on 24,500 hectares of land spread across Kerala, Assam, Tamil Nadu and West Bengal. It owns a majority stake in Consolidated Coffee, Asia's largest coffee company. The company recently acquired the UK-based Tetley, which has a 7% share (valued at US$ 600 m) of the world tea market.

Its interest costs are likely to surge even more as a result of the Tetley acquisition. On a half yearly basis, the company's turnover has declined 6%. However, sale of investments and some assets in the first quarter has resulted in a 176% surge in its other income in the first half of FY01. This is the single most important reason that has helped Tata Tea declare a 3% growth in bottomline in 1HFY01.

Excluding other income
(Rs m)2QFY002QFY01Change1HFY001HFY01Change
Profit before Tax514494-3.9%900625-30.6%
Profit after Tax386371-3.9%675469-30.5%
Net profit margin (%)59.7%66.5% 15.2%11.2% 
No. of Shares (eoy) (m)48.656.2 48.656.2 
Diluted no. of shares56.256.2 56.256.2 
Earnings per share*   24.016.7 
Current P/e ratio     10.4 

If we take out the other income from the profit before tax and then deduct 25% from that as tax, the bottomline shows a 31% decline in 1HFY01. The company's diluted EPS (annualised) on that basis shrinks from Rs 24.0 to Rs 16.7.

At the current price of Rs 173, the stock trades at a PER of 10.4 times its annualised FY01 earnings. We had projected an 8% growth in turnover and a 4% decline in its bottomline. The results are thus, below our expectations and deserve a relook.

Equitymaster requests your view! Post a comment on "Tata Tea: Poor blend in 1HFY01". Click here!


More Views on News

TATA CONSUMER Announces Quarterly Results (2QFY22); Net Profit Up 11.5% (Quarterly Result Update)

Oct 26, 2021 | Updated on Oct 26, 2021

For the quarter ended September 2021, TATA CONSUMER has posted a net profit of Rs 3 bn (up 11.5% YoY). Sales on the other hand came in at Rs 30 bn (up 9.1% YoY). Read on for a complete analysis of TATA CONSUMER's quarterly results.

TATA CONSUMER 2020-21 Annual Report Analysis (Annual Result Update)

Oct 22, 2021 | Updated on Oct 22, 2021

Here's an analysis of the annual report of TATA CONSUMER for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of TATA CONSUMER. Also includes updates on the valuation of TATA CONSUMER.

Tata Consumer Results Review: Net Profit Dips 42% but Margins Expand (Views On News)

Aug 4, 2021

Tata Consumer's India business impresses.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

What Led to the Massive Surge in the Stock of Jubilant FoodWorks? (Views On News)

Aug 18, 2021

Jubilant FoodWorks hits new high, surges 35% in a month on growth prospects.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

How to Hit Rs 100 Crore Wealth in Your Lifetime (Equitymaster Wealth)

Nov 15, 2021

This is how you can achieve the ambitious goal of a net worth of Rs 100 crore.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Nov 26, 2021 (Close)


  • Track your investment in TATA CONSUMER with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks