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I m p r o v i n g r e a l i s a t i o n s d r i v i n g p e r f o r m a n c e …
McLeod Russel posted robust Q1FY12 results with topline growth of 20%
to | 147 crore on the back of higher volumes as well as rising tea
realisations. The company sold 9.7 million kg of tea at an average
realisation of | 152.5/kg against 8.7 million kg at an average realisation of
| 140/kg in the corresponding quarter last year. Exports during the
quarter stood at 1.5 million kg against 1.0 million kg in Q1FY11 with
realisations surging to | 190/kg against | 63/kg. EBITDA margins
improved to 32.5% from 14.8% led by higher export realisations that are
driven by rising global demand. Employee cost in Q1FY12 increased by
13.0% to | 108 crore due to a rise in wages of labourers. Hence, in spite
of higher wages, net profits jumped by 98.7% to | 37.3 crore led by
higher tea prices and improving EBITDA margins.
ƒ Tea prices to maintain upward trend
Tea prices globally as well as in India remained in an upward trend.
Average grade prices in Kenya are hovering around US$3.68 per kg.
Simultaneously, in India, Assam tea prices, considered as high grade tea,
are ~| 145-150 per kg. We believe tea production in Kenya, which is the
largest exporting country, would be ~30 million kg lower compared to
the previous year. This would keep Indian export realisations higher.
V a l u a t i o n
At the current market price of | 267, the stock is trading at 10.2x and 9.6x
its FY12E and FY13E estimated EPS of | 26.3 and | 27.7, respectively. Tea
prices in 2011 season in India have opened ~10% higher compared to
the previous year on the back of higher export demand. Sales volumes
are expected to increase on the back of a recovery in production
compared to the loss of crop experienced last year. Hence, we expect the
company to witness strong growth in both topline and earnings and
remain positive on the stock, valuing it at 11x its FY13E EPS of | 27.7 with
a target price of | 305 per share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
I m p r o v i n g r e a l i s a t i o n s d r i v i n g p e r f o r m a n c e …
McLeod Russel posted robust Q1FY12 results with topline growth of 20%
to | 147 crore on the back of higher volumes as well as rising tea
realisations. The company sold 9.7 million kg of tea at an average
realisation of | 152.5/kg against 8.7 million kg at an average realisation of
| 140/kg in the corresponding quarter last year. Exports during the
quarter stood at 1.5 million kg against 1.0 million kg in Q1FY11 with
realisations surging to | 190/kg against | 63/kg. EBITDA margins
improved to 32.5% from 14.8% led by higher export realisations that are
driven by rising global demand. Employee cost in Q1FY12 increased by
13.0% to | 108 crore due to a rise in wages of labourers. Hence, in spite
of higher wages, net profits jumped by 98.7% to | 37.3 crore led by
higher tea prices and improving EBITDA margins.
ƒ Tea prices to maintain upward trend
Tea prices globally as well as in India remained in an upward trend.
Average grade prices in Kenya are hovering around US$3.68 per kg.
Simultaneously, in India, Assam tea prices, considered as high grade tea,
are ~| 145-150 per kg. We believe tea production in Kenya, which is the
largest exporting country, would be ~30 million kg lower compared to
the previous year. This would keep Indian export realisations higher.
V a l u a t i o n
At the current market price of | 267, the stock is trading at 10.2x and 9.6x
its FY12E and FY13E estimated EPS of | 26.3 and | 27.7, respectively. Tea
prices in 2011 season in India have opened ~10% higher compared to
the previous year on the back of higher export demand. Sales volumes
are expected to increase on the back of a recovery in production
compared to the loss of crop experienced last year. Hence, we expect the
company to witness strong growth in both topline and earnings and
remain positive on the stock, valuing it at 11x its FY13E EPS of | 27.7 with
a target price of | 305 per share.
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