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Firming tea prices to improve earnings…
Jayshree Tea reported Q4FY11 results. The net sales (standalone) grew
~14% to | 100.75 crore from | 88.4 crore in Q4FY10. Though the sales
were higher losses at the EBITDA level increased from 11.6% (| 10.3
crore) in Q4FY10 to 13.8% (| 13.9 crore) in Q4FY11. The dip was mainly
on account of higher raw material costs that increased ~520 bps to
60.8% of sales (| 61.3 crore). During the quarter, Jayshree’s interest cost
was also higher by ~150% at | 3.3 crore on the back of the loans taken
for acquisitions in Uganda. Thus, with subdued margins, higher interest
cost and complete accounting of tax for the year during the quarter; net
loss increased to | 22.4 crore in Q4FY11 from | 17.5 crore in Q4FY10.
Operational highlights for the year
Jayshree’s standalone sales volume for FY11 stood at ~30.6 mkg (million
kg) against ~29.7 mkg in FY10. Though the volumes were a tad higher,
the average realisation declined by ~| 3/kg to ~| 117/kg, thereby keeping
revenues from tea flat at | 358.1 crore. Of the total tea sales for FY11, 23.8
mkg was sold in the domestic market while ~8 mkg was exported.
Jayshree’s sales from the chemical & fertilisers business witnessed robust
growth of ~110% from | 44.1 crore in FY10 to | 92.9 crore in FY11.
Valuation
At the CMP of | 174, the stock is trading at 8.3x and 5.7x its FY11 and
FY12E EPS of | 21.1 and | 30.8, respectively. We believe that with the
higher (~| 20-25/kg) tea prices in FY12 led by a robust demand from the
Middle East and European countries and the country closing the current
year (FY11) with a shortage of ~50 mkg of tea, tea prices would continue
to remain firm, thereby driving Jayshree’s earnings. Going ahead, with
the production from the company’s overseas gardens (Rwanda and
Uganda) pouring in, sales (volumes) would further increase by ~4.5 mkg
thereby driving the topline. Hence, we have valued the stock at 6.3x its
FY12E EPS of | 30.8, upgrading our target price to | 195 with BUY rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Firming tea prices to improve earnings…
Jayshree Tea reported Q4FY11 results. The net sales (standalone) grew
~14% to | 100.75 crore from | 88.4 crore in Q4FY10. Though the sales
were higher losses at the EBITDA level increased from 11.6% (| 10.3
crore) in Q4FY10 to 13.8% (| 13.9 crore) in Q4FY11. The dip was mainly
on account of higher raw material costs that increased ~520 bps to
60.8% of sales (| 61.3 crore). During the quarter, Jayshree’s interest cost
was also higher by ~150% at | 3.3 crore on the back of the loans taken
for acquisitions in Uganda. Thus, with subdued margins, higher interest
cost and complete accounting of tax for the year during the quarter; net
loss increased to | 22.4 crore in Q4FY11 from | 17.5 crore in Q4FY10.
Operational highlights for the year
Jayshree’s standalone sales volume for FY11 stood at ~30.6 mkg (million
kg) against ~29.7 mkg in FY10. Though the volumes were a tad higher,
the average realisation declined by ~| 3/kg to ~| 117/kg, thereby keeping
revenues from tea flat at | 358.1 crore. Of the total tea sales for FY11, 23.8
mkg was sold in the domestic market while ~8 mkg was exported.
Jayshree’s sales from the chemical & fertilisers business witnessed robust
growth of ~110% from | 44.1 crore in FY10 to | 92.9 crore in FY11.
Valuation
At the CMP of | 174, the stock is trading at 8.3x and 5.7x its FY11 and
FY12E EPS of | 21.1 and | 30.8, respectively. We believe that with the
higher (~| 20-25/kg) tea prices in FY12 led by a robust demand from the
Middle East and European countries and the country closing the current
year (FY11) with a shortage of ~50 mkg of tea, tea prices would continue
to remain firm, thereby driving Jayshree’s earnings. Going ahead, with
the production from the company’s overseas gardens (Rwanda and
Uganda) pouring in, sales (volumes) would further increase by ~4.5 mkg
thereby driving the topline. Hence, we have valued the stock at 6.3x its
FY12E EPS of | 30.8, upgrading our target price to | 195 with BUY rating.
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