Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Tata Tea: Poor blend in 1HFY01 - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Nov 1, 2000

    Tata Tea: Poor blend in 1HFY01

    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) 2QFY00 2QFY01 Change 1HFY00 1HFY01 Change
    Sales 2,313 2,275 -1.6% 4,448 4,200 -5.6%
    Other Income 132 63 -52.3% 133 368 176.4%
    Expenditure 1,718 1,682 -2.1% 3,370 3,366 -0.1%
    Operating Profit (EBDIT) 595 593 -0.4% 1,078 834 -22.7%
    Operating Profit Margin (%) 25.7% 26.1%   24.2% 19.8%  
    Interest (Net) 33 50 53.1% 83 109 31.0%
    Depreciation 48 49 1.0% 96 99 4.0%
    Profit before Tax 646 557 -13.8% 1,033 994 -3.8%
    Tax 184 197 6.8% 310 247 -20.5%
    Profit after Tax/(Loss) 462 361 -22.0% 723 747 3.3%
    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) 2QFY00 2QFY01 Change 1HFY00 1HFY01 Change
    Profit before Tax 514 494 -3.9% 900 625 -30.6%
    Tax 129 124 -3.9% 225 156 -30.5%
    Profit after Tax 386 371 -3.9% 675 469 -30.5%
    Net profit margin (%) 59.7% 66.5%   15.2% 11.2%  
    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*       24.0 16.7  
    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

    GSK Consumer: On the Recovery Path (Quarterly Results Update - Detailed)

    Jun 20, 2017

    While GSK consumer reported muted revenue growth, volumes are seen to be recovering.

    Apex frozen food Ltd. (IPO)

    Aug 21, 2017

    Should you subscribe to the IPO of Apex Frozen Foods Ltd?

    A Little Gem in the FMCG Sector (Sector Info)

    Jul 18, 2016

    Will investing in Bajaj Corp yield high returns on account of a rural revival in sight?

    Parag Milk Foods Limited (IPO)

    May 4, 2016

    Should you subscribe to Parag Milk Foods' initial public offering?

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 22, 2017 10:57 AM


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



    Compare Company With Charts