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O u t l o o k r e m a i n s p o s i t i v e …
Jayshree Tea’s (JT) Q1FY12 results were better than our expectations
with the growth in earnings witnessing a significant jump. The topline of
the company rose by 10.8% YoY to |91.3 crore (I-direct estimate: |75.8
crore) over |82.4 crore in Q1FY11. We believe this was largely on account
higher sales volumes and realizations from tea business. Margins
improved from 16.5% (Q1FY11) to 25% (Q1FY12) led by the lower raw
material costs. The raw material costs as a percentage of net sales were
lower at 4.7% (Q1FY12) against 13.5% (Q1FY11). The considerable
improvement in margins led to robust growth of ~54% in the earnings
that stood at |18.1 crore against |11.8 crore in Q1FY11. During the
quarter, the interest cost increased by ~143% to |3.9 crore from |1.6
crore in the corresponding quarter last year; however, its impact on PAT
was cushioned by the higher EBITDA posted during the quarter.
ƒ Operational Highlights
JT’s tea sales during the quarter was higher by ~25% and stood at |68.2
crore, compared to |54.7 crore in Q1FY11. Sales from chemicals and
fertilizers remained subdued, declining by ~16% to |23.5 crore.
We believe that the company had better realizations both in tea and
chemicals business, consequently improving its EBIT (Earnings Before
Interest and Tax) to |19.1 crore (|10.1 crore in Q1FY11) and |4.2 crore
(|3.2 crore in Q1FY11) from tea and chemicals business respectively.
V a l u a t i o n
The stock is trading at 4.9x and 4.4x its FY12 and FY13 estimated EPS of
|29.4 and |32.5, respectively. With the production in Kenya (largest
exporter) already lower by ~17% to 178.4 mn kg for Jan-June, 2011
compared to that of last year and increasing demand for tea in global
markets, we expect the tea prices to remain firm (already higher by |10-
15/kg during the current season) in India. Also, with the production of the
country back on track, we expect both sales volumes and higher prices to
keep JT’s revenues and earnings growth robust. Hence, we maintain our
price target of |195 per share with a BUY rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
O u t l o o k r e m a i n s p o s i t i v e …
Jayshree Tea’s (JT) Q1FY12 results were better than our expectations
with the growth in earnings witnessing a significant jump. The topline of
the company rose by 10.8% YoY to |91.3 crore (I-direct estimate: |75.8
crore) over |82.4 crore in Q1FY11. We believe this was largely on account
higher sales volumes and realizations from tea business. Margins
improved from 16.5% (Q1FY11) to 25% (Q1FY12) led by the lower raw
material costs. The raw material costs as a percentage of net sales were
lower at 4.7% (Q1FY12) against 13.5% (Q1FY11). The considerable
improvement in margins led to robust growth of ~54% in the earnings
that stood at |18.1 crore against |11.8 crore in Q1FY11. During the
quarter, the interest cost increased by ~143% to |3.9 crore from |1.6
crore in the corresponding quarter last year; however, its impact on PAT
was cushioned by the higher EBITDA posted during the quarter.
ƒ Operational Highlights
JT’s tea sales during the quarter was higher by ~25% and stood at |68.2
crore, compared to |54.7 crore in Q1FY11. Sales from chemicals and
fertilizers remained subdued, declining by ~16% to |23.5 crore.
We believe that the company had better realizations both in tea and
chemicals business, consequently improving its EBIT (Earnings Before
Interest and Tax) to |19.1 crore (|10.1 crore in Q1FY11) and |4.2 crore
(|3.2 crore in Q1FY11) from tea and chemicals business respectively.
V a l u a t i o n
The stock is trading at 4.9x and 4.4x its FY12 and FY13 estimated EPS of
|29.4 and |32.5, respectively. With the production in Kenya (largest
exporter) already lower by ~17% to 178.4 mn kg for Jan-June, 2011
compared to that of last year and increasing demand for tea in global
markets, we expect the tea prices to remain firm (already higher by |10-
15/kg during the current season) in India. Also, with the production of the
country back on track, we expect both sales volumes and higher prices to
keep JT’s revenues and earnings growth robust. Hence, we maintain our
price target of |195 per share with a BUY rating.
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