X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 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: Exchange gain saves the day - Views on News from Equitymaster
  • MyStocks

MEMBER'S LOGINX

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

Tata Tea: Exchange gain saves the day
Nov 20, 2008

Performance summary
  • Consolidated topline is up 13.7% YoY during 2QFY09, while a 13% YoY growth is witnessed during 1HFY09 driven by strong brand performance across all key markets.

  • Consolidated operating margins decline by 3.2% during 2QFY09, while they are down by 2.8% during 1HFY09.

  • Consolidated bottomline, excluding the extraordinary items, grows by a superlative 138% YoY during the quarter, while for 1HFY09, it increases by 110% YoY.



Consolidated Financial Performance

(Rs m) 2QFY08 2QFY09 Change 1HFY08 1HFY09 Change
Income from Operations 10,611 12,065 13.7% 20,719 23,412 13.0%
Expenditure 8,955 10,569 18.0% 17,456 20,378 16.7%
Operating Profit (EBDITA) 1,657 1,496 -9.7% 3,263 3,034 -7.0%
Operating Profit Margin (%) 15.6% 12.4% 15.7% 13.0%
Other Income 204 219 7.3% 291 293 0.8%
Interest (Net) 632 154 -75.7% 1,550 263 -83.1%
Depreciation 217 221 2.1% 453 443 -2.1%
Profit before Tax 1,013 1,341 32.4% 1,551 2,621 69.0%
Extraordinary income/(expense) (129) (63) - (168) (49) -71.0%
Exchange gain 96 2,046 2027.1% 221 2,046 827.6%
Tax 298 1,031 245.8% 432 1,471 240.2%
Profit after Tax/(Loss) 682 2,294 236.4% 1,171 3,148 168.9%
Share of profit/(loss) from assosiates 250 322 29.0% 216 333 53.9%
Minority interest (118) (439) 272.5% (135) (547) 306.1%
Group consolidated net profit 814 2,177 167.5% 1,252 2,934 134.3%
Net profit margin (%) 7.7% 18.0% 6.0% 12.5%
No. of Shares (m) 56.2 61.8 56.2 61.8
Earnings per share (Rs)* 277
P/E (x)* 1.7
* 12months trailing earnings

What has driven performance in 2QFY09?
  • The consolidated topline was up 13.7% YoY during the quarter, while a 13% YoY jump was witnessed during the half year period driven by strong brand performance across all key markets. The domestic operations reported a 14% YoY increase during the quarter driven by strong performance of the company’s domestic branded tea operations. While tea segment grew by 11% YoY, coffee segment sales were up 23% YoY. The international operations witnessed a 13.5% YoY growth during the quarter.

    Indian operations

    Rs m 2QFY08 2QFY09 Change 1HFY08 1HFY09 Change
    Income from Operations 2,837 3,243 14.3% 5,643 6,393 13.3%
    Expenditure 2,487 3,001 20.7% 4,745 5,617 18.4%
    Operating Profit (EBDITA) 351 242 -31.0% 899 776 -13.6%
    Operating Profit Margin (%) 12.4% 7.5% 15.9% 12.1%
    Other Income 290 464 60.0% 428 586 36.7%
    Interest (Net) 103 103 -0.1% 212 167 -21.1%
    Depreciation 29 26 -11.3% 55 50 -9.2%
    Profit before Tax 508 577 13.5% 1,060 1,145 8.0%
    Extraordinary income/(expense) (20) 30 (11) 8 -168.2%
    Tax 120 169 40.7% 268 337 25.9%
    Profit after Tax/(Loss) 369 438 18.7% 781 815 4.3%
    Net profit margin (%) 13.0% 13.5% 13.8% 12.7%

  • Consolidated operating margins declined by 3.2% during 2QFY09, while they were down 2.8% during 1HFY09. All the expenses other than staff costs were higher as a percent of sales. On a standalone basis, the margins were lower by 4.9% and 3.8% respectively for both the periods under consideration. Margins were mainly impacted by hardening commodity prices and inflationary rise in input costs. The company spent higher on advertising for launching new brands and increasing market penetration in the US during the quarter.

  • Consolidated bottomline excluding the extraordinary items (reorganization costs and amortization of amounts incurred on Employee Separation schemes partially offset by profit on sale of shares) jumped 138% YoY during the quarter, while for 1HFY09, it increased by 110% YoY. Lower interest costs and higher forex gains (forex fluctuation arising out of an overseas deposit made from the sale of a 25% stake in Glaceau) aided the growth. Having said that, if one excludes the forex exchange gain, the bottomline declined by 77% YoY during the quarter. The net profits on a standalone basis, excluding the extraordinary items, witnessed a growth of 5% YoY during 2QFY09, while the bottomline was up 2% YoY during 1HFY09. Lower margins and higher tax rates restricted the growth. The standalone profits contributed 28% to the total profits in 1HFY09 (62% in 1HFY08).

What to expect?
At the current price of Rs 464, the stock is trading at a price to earnings multiple of 1.7 times its 12-month trailing consolidated earnings. The company has done well in its domestic and international operations. While input prices may hurt in the near term, the management expects tea prices to soften from 1QFY10. Besides betting big on products like tea bags and the ready-to-drink market, the company is in the process of undergoing an image makeover to ensure higher growth and penetration. The company is looking at acquisitions in new geographies and other beverage offerings. Acquisitions are likely to be important growth drivers as it will aid the company to market itself more as an FMCG company rather than a plantation company.

To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

TATA GLOBAL BEV. SHARE PRICE


Feb 23, 2018 (Close)

TRACK TATA GLOBAL BEV.

  • 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

MORE ON TATA GLOBAL BEV.

TATA GLOBAL BEV. - TIGER BRANDS COMPARISON

COMPARE TATA GLOBAL BEV. WITH

MARKET STATS