Thursday, March 25, 2010

Stock Idea: McLEOD RUSSEL

This B.M.Khaitan tea company has been literally on the boil. With tea prices perking up, the company has been able to brew a set of very good financial performance for the third quarter ended 31st Dec 2009.

The world's single largest producer of tea with gardens spread across India, Vietnam and Uganda, posted on a YoY, a whopping 184% jump in net profit at Rs.137.94 crore. This super jump in net was on account of the production going up from 205 lakh kgs to 227 lakh kgs. Sales volumes jumped up from 211 lakh kg to 235 lakh kg. More importantly, its sales realization, on an average for Q3 was at Rs.142.41 kg vis-à-vis Rs.114.91 per kg.

The bullish cycle in tea is expected to continue over the next 4 years. Next year, prices are estimated to remain high due to global tea shortage on account of drought in Kenya, Sri Lanka and India, which account for more than 50% of global tea exports. There has been a 32% drop in crop harvest in Sri Lanka and 21% drop in Kenya.

Tea prices in India are expected to remain at the current high levels till end of this year. The company aims to have a revenue of Rs.1,000 crore in current fiscal and net profit is expected to be around Rs. 480 crore for the full year.

Stay invested as FY10 will end at a historical high performance for Mcleod.

Source: Internet (premiuminvestments.in S P Tulsian)

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