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D i sm a l e a r n i n g s…
Jayshree Tea posted dismal Q3FY12 results as earnings got eroded due
to subdued earnings from the tea segment and losses from the sugar
segment. Net sales increased by 65% to | 166.9 crore after the
consolidation of the sugar business. The company has changed the
inventory valuation methodology, which has resulted in higher operating
cost in the third quarter. Subsequently, it would result in lower losses in
the fourth quarter. EBITDA margins dipped from 19.7% to 5.1% as other
expenditure has increased from | 16.9 crore to | 29.9 crore. Net profit got
eroded from | 19.8 crore in Q3FY11 to | 0.7 crore due to lower EBITDA.
Operational Highlights
Revenues from the tea segment increased by 5.7% from | 104.9 crore to
| 110.9 crore on the back of higher volumes and stable price realisations.
However, earnings from the tea segment declined from | 22.6 crore to
| 9.3 crore due to higher operating expenses. Revenues from the sugar
segment declined from | 54.1 crore in Q2FY12 to | 26.9 crore in Q3FY12
due to the late start of crushing. However, losses in the segment came
down from | 4.7 crore in Q2FY12 to | 1.2 crore.
Valuation
The stock is trading at 6.4x and 5.2x its FY12 and FY13 estimated EPS of |
15.2 and | 19.0, respectively. With higher domestic production, export
volumes for Indian companies have remained high. However, subdued
results from the sugar segment still remain an overhang on the stock. We
believe the tea segment would continue to do well in FY13 as volumes
and realisation continue to remain stable but uncertainly about the sugar
business would be a drag. We are cautious on earnings from the sugar
segment and, hence, have downgraded the stock from BUY to HOLD with
a target price of | 105/share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
D i sm a l e a r n i n g s…
Jayshree Tea posted dismal Q3FY12 results as earnings got eroded due
to subdued earnings from the tea segment and losses from the sugar
segment. Net sales increased by 65% to | 166.9 crore after the
consolidation of the sugar business. The company has changed the
inventory valuation methodology, which has resulted in higher operating
cost in the third quarter. Subsequently, it would result in lower losses in
the fourth quarter. EBITDA margins dipped from 19.7% to 5.1% as other
expenditure has increased from | 16.9 crore to | 29.9 crore. Net profit got
eroded from | 19.8 crore in Q3FY11 to | 0.7 crore due to lower EBITDA.
Operational Highlights
Revenues from the tea segment increased by 5.7% from | 104.9 crore to
| 110.9 crore on the back of higher volumes and stable price realisations.
However, earnings from the tea segment declined from | 22.6 crore to
| 9.3 crore due to higher operating expenses. Revenues from the sugar
segment declined from | 54.1 crore in Q2FY12 to | 26.9 crore in Q3FY12
due to the late start of crushing. However, losses in the segment came
down from | 4.7 crore in Q2FY12 to | 1.2 crore.
Valuation
The stock is trading at 6.4x and 5.2x its FY12 and FY13 estimated EPS of |
15.2 and | 19.0, respectively. With higher domestic production, export
volumes for Indian companies have remained high. However, subdued
results from the sugar segment still remain an overhang on the stock. We
believe the tea segment would continue to do well in FY13 as volumes
and realisation continue to remain stable but uncertainly about the sugar
business would be a drag. We are cautious on earnings from the sugar
segment and, hence, have downgraded the stock from BUY to HOLD with
a target price of | 105/share.
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