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D i s m a l e a r n i n g s …
Jayshree Tea’s Q2FY12 results were below our expectations as net profit
witnessed a 33% de-growth to | 29.6 crore on the back of losses in the
sugar division. However, net sales grew by 51.5% to | 209.6 crore after
the acquisition of MP Chini last year. Margins have dipped from 25.2% to
18.9% as the sugar division posted | 4.73 crore of losses. Employee cost
for the company increased by 17.1% to | 40.3 crore from | 34.4 crore in
Q2FY11 on the back of a revision in wages. Power & fuel cost also
witnessed a 15% rise compared to the corresponding quarter.
Operational Highlights
The company reported 7.1% revenue growth in the tea segment led by an
increase in export prices after a drop in production in Kenya (largest tea
exporter). Revenues from the chemical segment also witnessed strong
32% growth while revenues from the sugar segment stood at | 54.1
crore. Margins in the tea segment improved from ~28% in Q1FY11 to
~34% in Q2FY12 due to a sharp increase in export prices in July and
August. Export tea prices for Indian companies were up 15% in July and
4% in August. We believe tea prices would continue to remain high as
production in Kenya and other African countries would not increase
sharply in 2012 whereas export demand for Indian tea has been rising
continuously. Simultaneously, higher production in India would result in
strong volume growth.
Valuation
The stock is trading at 5.2x and 4.4x its FY12 and FY13 estimated EPS of |
27.7 and | 32.5, respectively. With higher domestic production, export
volumes for Indian companies are likely to remain high. With the
production in Kenya (largest exporter) already lower by ~10% to 259.3
million kg for January-September, 2011 compared to last year, we believe
the company would get the benefit of higher global prices. This would
result in higher margins for the company, going forward. 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 �� ��
D i s m a l e a r n i n g s …
Jayshree Tea’s Q2FY12 results were below our expectations as net profit
witnessed a 33% de-growth to | 29.6 crore on the back of losses in the
sugar division. However, net sales grew by 51.5% to | 209.6 crore after
the acquisition of MP Chini last year. Margins have dipped from 25.2% to
18.9% as the sugar division posted | 4.73 crore of losses. Employee cost
for the company increased by 17.1% to | 40.3 crore from | 34.4 crore in
Q2FY11 on the back of a revision in wages. Power & fuel cost also
witnessed a 15% rise compared to the corresponding quarter.
Operational Highlights
The company reported 7.1% revenue growth in the tea segment led by an
increase in export prices after a drop in production in Kenya (largest tea
exporter). Revenues from the chemical segment also witnessed strong
32% growth while revenues from the sugar segment stood at | 54.1
crore. Margins in the tea segment improved from ~28% in Q1FY11 to
~34% in Q2FY12 due to a sharp increase in export prices in July and
August. Export tea prices for Indian companies were up 15% in July and
4% in August. We believe tea prices would continue to remain high as
production in Kenya and other African countries would not increase
sharply in 2012 whereas export demand for Indian tea has been rising
continuously. Simultaneously, higher production in India would result in
strong volume growth.
Valuation
The stock is trading at 5.2x and 4.4x its FY12 and FY13 estimated EPS of |
27.7 and | 32.5, respectively. With higher domestic production, export
volumes for Indian companies are likely to remain high. With the
production in Kenya (largest exporter) already lower by ~10% to 259.3
million kg for January-September, 2011 compared to last year, we believe
the company would get the benefit of higher global prices. This would
result in higher margins for the company, going forward. Hence, we
maintain our price target of |195 per share with a BUY rating.
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