Interesting trivia about Wagh Bakri Brand while we are discussing this topic. I vividly remember discussions in the Marketing Class during MBA.
1 Like
Has anyone checked what Jay Shree had to say about tea production in Assam. I think the price will firm up but production will be low. This could end up as not much change in terms of topline and even bottomline.
I have seen that Dhunseri jumped over last few sessions. But, I am still not sure if the company will perform really well in upcoming quarters.
Yes, the production was low in Assam region in September quarter due to which results will be affected but the rise in tea prices have more impact comparatively so the results will be positive.
Disclosure: invested
Results are declared by the company for Q2 2017 and after a fall in production in September, eps has increased by 3 rs compared to Q2 2016. From 17.32 rs. to 20.29 rs.
Any news ? stock has been doing UC from two days.
uptrend in tea cycle started…
Quite strangely, the stock touched 52 week high recently and has cooled down quite a lot. I am not sure why it went with strong upper circuits and recently, declined at a fast pace.
can anyone offer an insight as to why the price has fallen considerably over the past few months?
This stock has seen lot of volatility in the last three months. I don’t see any reason for Dhunseri to jump from 52-week low to 52-week high and then again slide towards 52-week low.
no impact of result on stock price, company has reported net sales of Rs.33.98 crores during the 3 months period ended June 30, 2018 as compared to Rs.22.55 crores during the 3 months period ended June 30, 2017.The company has posted net profit of Rs.1.06 crores for the 3 months period ended June 30, 2018 as against Rs.(2.44) crores for the 3 months period ended June 30, 2017.The company has reported EPS of Rs.1.52 for the 3 months period ended June 30, 2018 as compared to Rs.(3.50) for the 3 months period ended June 30, 2017
Unable to access the link. Is the page active?
The company is carrying cash & liquid investments worth their market cap. The tea business is free. Lowest p/b in the sector.
Looks like a value stock recently they have been restructuring their business by buying and selling their tea gardens.Not much information is in the domain but looks like a good stock for long term they also have plantations in Africa.
The other company, Dhunseri ventures, is also designed on similar lines, lot of stock investments+ plastic bottle resin biz. Liquidity is terrible and price action looks managed rather than market driven. Need to be careful.
How can we know or assume that price is operated or managed? bcoz the stock has rarely moved in recent time except today.
There are spikes of UC and over time stock reverts back to original level. A company with growing value and easy to value should trend higher with time. This is behaving like a value trap
Tea Estates are going through difficult time since last 15 years. Few of the issues faced by the industry include:
-
Over Supply - Supply has increased constantly while demand has increased at tepid rate, causing stagnant/declining tea prices over many years.
-
Organized to Unorganized shift - Small tea growers have increased constantly during last 15 years. From 25% during 2010, they now contribute 50% of the total supply of tea.They dont follow government regulations of paying minimum wages to labour and hence are cost competitive.
-
Political Hindrance - Major cost of tea estate is labour and governement continues to raise minimum labour price every few years, which causes increase in expense for corporate tea growers.
-
Internationally Uncompetitive - Indian Tea is not compeptitive international market, because of high cost of labour, power and irrigation. So, Indian tea cannot be sold at profit in international market.
-
Raw Material Prices - Input costs for tea production has been rising since last decade. Power, Irrigation, Pesticides and Labour all have become expensive but tea prices have remain stagnant.
All tea estate companies are in losses since last few years, which explains why they are classified as Investment Gutter in the market.
However, every commodity has its cycle and it rhymes from peak to bottom and vice versa. Tea as a commodity is essential need of humans, and it has to remain viable for producers. With current state, it looks like the entire industry will close, which offcourse is not possible.
Yes, many tea etates may close down, but eventully that will bring demand supply in balance.
1 Like
Good analysis of tea producers by Dr Vijay Malik