Jayshree Tea and Industri :
BSE ID : 509715
NSE ID : JAYSREETEA
CMP: Rs.269.20
On an equity capital of Rs.11.17 crore, the company for FY10, is expected to have an EPS of around Rs. 75 and in FY11 an EPS of Rs.100 plus. The icing on the cake is the fact that the company is virtually debt free. Its total interest outgo till H1FY10 was a miniscule Rs. 4.59 crores, which is on account of the working capital needs.
Jayshree Tea and Industries
A BK Birla group company, Jay Shree Tea, the second largest bulk tea company was established way back in 1945. Over a period of time, acquiring a growing number of tea estates in both North and South India, it currently has 21 tea estates. 9,168 hectares is the area under cultivation and production is 21.80 million kgs. It produces around 10% of total Darjeeling tea produced in the country.
Besides tea, the company manufactures Single Super phosphate and Sulphuric Acid in its plants at Khardah and Gurgaon. The company is also engaged in Warehousing activities at Kolkatta and Kochi. It has also developed prestigious residential and commercial complexes at Calcutta and Bangalore. It is in the process of developing residential complexes in the heart of Kolkatta through its subsidiary Shiva’s Group Limited.
Tea is one crop, which is expected to show a shortage vis-à-vis the supply. The drought in Kenya, India and Sri Lanka has left a huge gap between the production and supply. The crop, as estimated in September 2009, was to have a deficit of around 110 million kgs but as per the latest estimate, this is now set to widen to 130 million kgs. And the shortage of crop is to percolate down to 2011 as well.
In India consumption is currently increasing at the rate of 3% per annum. At this rate, from being a net exporter of India presently, the likely trend emerging is that over the next 7-8 years, India could turn into a net importer.
Tea prices, which had soared to a high of $ 3.18 a kilogram in September 2009, compared to an average price of $ 2.38 per kilogram in 2008, are expected to go up even further. Price of Assam tea in India, which in 2008 was at around Rs 65 per kg, doubled up to Rs 130 per kg in 2009. Prices are expected to go up further and thus give a major boost to the earnings.
And all these very facts have been amply reflected in the financial performance of the company. For Q2FY10, as at 30th Sept 2009, it posted a net revenue of Rs 110 crore, which QoQ was up 58%. EBIDTA was up 116% at Rs 37.11 crore. Net profit was at Rs 33.16 crore, up 159%.
The most significant numbers, which reflect the higher realizations are the profit margins. OPM for Q2FY10 was at 33.76%, almost 3 times higher than the OPM of 12.39% of Q2FY09. The most significant has been the jump in NPM. It was at 30.14%, the highest in its history, compared to a mere 6.86% in Q2FY09.
For H1FY10, net revenue was at Rs 179.96 crore much lower than the Rs 417.76 crore for 12MFY09. But EBIDTA for H1FY10 was at Rs 72.4 crore vs Rs 34.80 crore for FY09. Net profit for the first half was at Rs 45.97 crore, as against Rs 13.88 crore for FY09. Clearly, Jay Shree will end FY10 on probably one of its highest ever numbers.
On an equity capital of Rs 11.17 crore, the company for FY10, is expected to have an EPS of around Rs 75 and in FY11 an EPS of Rs 100 plus.
The icing on the cake is the fact that the company is virtually debt free. Its total interest outgo till H1FY10 was a miniscule Rs 4.59 crores, which is on account of the working capital needs.
The stock touched a new 52-week high yesterday at Rs 398.70. It ended the day at Rs 389.75. And even at this rate, the stock has ample scope for future appreciation.
At the current rate of Rs 376.40, the stock is a prime pick to take advantage of the expected boom time for tea cultivators.
Related posts: