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Tea
Global supplies improving
Tea production in Kenya, which is the largest tea exporter in the world,
has witnessed 8% decline to 336 million kg (Jan-Nov 2011) in tea
production in 2011, which resulted in higher global tea prices and high
export prices for Indian companies. Production in Kenya has started
improving from September 2011. We believe production in 2012 would
increase to 390 million kg, which would keep the tea prices at ~ US $ 3
per kg.
Higher domestic production lead to strong volume growth
Tea production in India would increase to above 1000 million kg in 2011,
higher than 966 million kg in 2010 led by the normal monsoon in North
India. Tea production during January-October 2011 has been 847 million
kg, 4% higher than 813 million kg in January-October 2010. Higher
production in the current year has resulted in strong volume growth for
most of the Indian tea companies. Simultaneously high export
realisations would result in robust earning growth in Q3FY12.
Company specific view
Harrison
Malayalam
The company is expected to sell 5.3 million kg of tea with the average realisation of
| 73 per kg. However rubber volumes would be 2816 tonnes with the average
realisations of |190 per kg.
Jayshree Tea We expect the company to sell 10.5 million kg with the average realisatios of | 144
per kg. With the increase in production and higher export prices, the company would
witness a 36% topline growth.However, sugar business for the company would
remain a drag.
McLeod Russel We expect the company to sell 25.7 million kg of tea with the average realisation of
| 159 per kg. Out of 25.7 million kg, the company is expected to sell 15.9 million kg
in India and 9.7 million kg as exports. We bleieve tea prices coming down from
november 2011 would have a limited impact in Q3FY12.
Source: Company, ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tea
Global supplies improving
Tea production in Kenya, which is the largest tea exporter in the world,
has witnessed 8% decline to 336 million kg (Jan-Nov 2011) in tea
production in 2011, which resulted in higher global tea prices and high
export prices for Indian companies. Production in Kenya has started
improving from September 2011. We believe production in 2012 would
increase to 390 million kg, which would keep the tea prices at ~ US $ 3
per kg.
Higher domestic production lead to strong volume growth
Tea production in India would increase to above 1000 million kg in 2011,
higher than 966 million kg in 2010 led by the normal monsoon in North
India. Tea production during January-October 2011 has been 847 million
kg, 4% higher than 813 million kg in January-October 2010. Higher
production in the current year has resulted in strong volume growth for
most of the Indian tea companies. Simultaneously high export
realisations would result in robust earning growth in Q3FY12.
Company specific view
Harrison
Malayalam
The company is expected to sell 5.3 million kg of tea with the average realisation of
| 73 per kg. However rubber volumes would be 2816 tonnes with the average
realisations of |190 per kg.
Jayshree Tea We expect the company to sell 10.5 million kg with the average realisatios of | 144
per kg. With the increase in production and higher export prices, the company would
witness a 36% topline growth.However, sugar business for the company would
remain a drag.
McLeod Russel We expect the company to sell 25.7 million kg of tea with the average realisation of
| 159 per kg. Out of 25.7 million kg, the company is expected to sell 15.9 million kg
in India and 9.7 million kg as exports. We bleieve tea prices coming down from
november 2011 would have a limited impact in Q3FY12.
Source: Company, ICICIdirect.com Research
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