Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Company Profile
Incorporated on the October 27, 1945 Jay Shree Tea & Industries Ltd (JTIL), a well diversified
conglomerate of B.K. Birla Group of Companies, acquired a growing number of tea estates in
both North and South India and initiated innovative, intensive and integrated field development
work on all fronts. JTIL has adopted a marketing strategy to provide Garden Fresh Tea to all its
clients. Besides tea, JTIL manufactures Single Super phosphate and Sulphuric Acid. The
company is also engaged in Warehousing activities at Calcutta and Kochi. It has also developed
prestigious residential and commercial complexes at Calcutta and Bangalore. JTIL has under its
fold 22 tea estates including two estates in its subsidiary spread all over India and manufactures
around 15 million Kgs of tea per annum. Total area under tea is around 8000 Hectares. JTIL
produces around 10% of total Darjeeling tea produced in the country.
Investment Rationale
Increase in yields
Increase its tea yields through better agricultural practices resulting in
substantially lowering raw material and miscellaneous expenses per unit
of sales.
Treasury management resulting in lower interest cost
JTIL has successfully invested surplus funds in treasury instruments.
The returns from these investments have helped the company to better
manage its interest costs.
Interest cost of the company in FY10 decreased by approximately 26%.
Active treasury management by the company has helped to keep its
interest cost low which would otherwise be at higher levels.
Inorganic growth through acquisitions
Focused on increasing its revenues by maximizing its quantity
produced. The company has acquired estates in Rwanda and Uganda to
the tune of USD 6.5 million for the control of 11.3 million kgs in East
Africa.
Assam tea is a good blend with Ugandan Tea which shall augur well for
the shareholders in the long run.
Improved realization of export prices
Indian tea is widely sought in the export market. India will be facing a
100 mn kgs. deficit in tea production at the starting of the new season in
April leading to increase in export prices.
Acquisition of MP Chini Industries
Forayed into sugar industry with the acquisition of MP Chini Industries
This is likely to hedge the revenue streams of JTIL by diversifying its
existing portfolio which was earlier focused on tea and fertilizers.
Outlook & Recommendation
We expect bouyant tea prices in near term. Moreover, recent rally in JTIL
prices seems to have factored in most of this bouyancy. JTIL holds a leading
position in tea industry.
Stock is currently trading at a PE of 4.61x FY12E and 3.85x FY13E EPS.
We recommend HOLD rating on the stock with a 18 months target price
of Rs 192, at 4.5x FY13E earnings, giving it an upside of 17% from the
current levels.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Company Profile
Incorporated on the October 27, 1945 Jay Shree Tea & Industries Ltd (JTIL), a well diversified
conglomerate of B.K. Birla Group of Companies, acquired a growing number of tea estates in
both North and South India and initiated innovative, intensive and integrated field development
work on all fronts. JTIL has adopted a marketing strategy to provide Garden Fresh Tea to all its
clients. Besides tea, JTIL manufactures Single Super phosphate and Sulphuric Acid. The
company is also engaged in Warehousing activities at Calcutta and Kochi. It has also developed
prestigious residential and commercial complexes at Calcutta and Bangalore. JTIL has under its
fold 22 tea estates including two estates in its subsidiary spread all over India and manufactures
around 15 million Kgs of tea per annum. Total area under tea is around 8000 Hectares. JTIL
produces around 10% of total Darjeeling tea produced in the country.
Investment Rationale
Increase in yields
Increase its tea yields through better agricultural practices resulting in
substantially lowering raw material and miscellaneous expenses per unit
of sales.
Treasury management resulting in lower interest cost
JTIL has successfully invested surplus funds in treasury instruments.
The returns from these investments have helped the company to better
manage its interest costs.
Interest cost of the company in FY10 decreased by approximately 26%.
Active treasury management by the company has helped to keep its
interest cost low which would otherwise be at higher levels.
Inorganic growth through acquisitions
Focused on increasing its revenues by maximizing its quantity
produced. The company has acquired estates in Rwanda and Uganda to
the tune of USD 6.5 million for the control of 11.3 million kgs in East
Africa.
Assam tea is a good blend with Ugandan Tea which shall augur well for
the shareholders in the long run.
Improved realization of export prices
Indian tea is widely sought in the export market. India will be facing a
100 mn kgs. deficit in tea production at the starting of the new season in
April leading to increase in export prices.
Acquisition of MP Chini Industries
Forayed into sugar industry with the acquisition of MP Chini Industries
This is likely to hedge the revenue streams of JTIL by diversifying its
existing portfolio which was earlier focused on tea and fertilizers.
Outlook & Recommendation
We expect bouyant tea prices in near term. Moreover, recent rally in JTIL
prices seems to have factored in most of this bouyancy. JTIL holds a leading
position in tea industry.
Stock is currently trading at a PE of 4.61x FY12E and 3.85x FY13E EPS.
We recommend HOLD rating on the stock with a 18 months target price
of Rs 192, at 4.5x FY13E earnings, giving it an upside of 17% from the
current levels.
No comments:
Post a Comment