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Dec 12, 2012, 02.31 PM IST | Source: Moneycontrol.com

Buy Tata Coffee; target Rs 1620: Firstcall Research

Firstcall Research is bullish on Tata Coffee and has recommended buy rating on the stock with a target price of Rs 1620 in its December 10, 2012 research report.

Firstcall Research is bullish on Tata Coffee and has recommended buy rating on the stock with a target price of Rs 1620 in its December 10, 2012 research report.

"Tata Coffee ltd, main object is Cultivation of coffee, pepper, oranges, paddy, cardamom & other plantation and agricultural products. The estates of the company are situated in coorg. The Company has started using Wind power in the manufacture of Freeze dried coffee. Tata Coffee Ltd has demonstrated the results during the quarter; its boisterous growth of Net Profit is steers by 109.44% to Rs. 368.49 million. The company focuses to grow the market for differentiated coffee to show results with volumes growing to 2123 MT as against 1847 MT in the previous year. Profit before interest, depreciation and tax is Rs.911.82 millions as against Rs.411.11 millions in the corresponding period of the previous year. Tata Coffee Ltd has recommended a Dividend of Rs. 11 per share of face value of Rs. 10 each aggregating to Rs. 2054.47 Lakhs for the year ended March 31, 2012. Net Sales and PAT of the company are expected to grow at a CAGR of 18% and 16% over 2011 to 2014E respectively."

"Tata Coffee is the largest integrated coffee plantation company in the world .Tata Coffee has a hand in every aspect of the coffee making process, with business activities ranging from growing and curing of coffee and tea to the manufacture and marketing of value-added coffee products, reported its financial results for the quarter ended 30 Sep, 2012. The Second quarter witnesses a healthy increase in overall sales as well as profitability on account of Sharp increase in Shareholder funds Rs.45.70 Million from March 12 to Rs.50.10 Million in Sept 12 driven by higher profits."

"The company’s net profit jumps to Rs.368.49 million against Rs.175.94 million in the corresponding quarter ending of previous year, an increase of 109.44%. Revenue for the quarter rose by 14.67% to Rs.4777.06 million from Rs.4165.74 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.19.73 a share during the quarter, registering at 109.44% increase over previous year period. Profit before interest, depreciation and tax is Rs.911.82 millions as against Rs.411.11 millions in the corresponding period of the previous year."

"At the current market price of Rs.1420.80, the stock P/E ratio is at 23.23 x FY13E and 19.26 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.61.16 and Rs.73.77 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 18% and 16% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 9.19 x for FY13E and 7.75 x for FY14E. Price to Book Value of the stock is expected to be at 4.29 x and 3.51 x respectively for FY13E and FY14E. The second quarter witnesses a healthy increase in overall sales as well as profitability on account of Sharp increase in Shareholder funds Rs.45.70 Million from March 12 to Rs.50.10 Million in Sept 12 driven by higher profits. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.1620.00 for Medium to Long term investment," says Firstcall Research report.

Public holding more than 90% in Indian cos

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