Firstcall Research's report on Tata Coffee
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 31st March, 2015.
The company achieved a turnover of Rs. 4499.80 million for the 4th quarter of the financial year 2015 as against Rs. 3972.80 million in the corresponding quarter of the previous year, driven by improved performance of both value added Coffee and Plantation businesses. The company’s net profit stood at Rs. 394.20 million as against Rs. 163.20 million in the corresponding quarter ending of previous year. The primary reason for the above growth in profits was superior performance in the Coffee Plantation business and in Value added products driven by the results of the Company’s US operating subsidiary, Eight O’Clock Coffee. For Q4 FY15, earnings per share of the company stood at Rs. 2.11 against Rs. 8.74 in Q4 FY14. Profit before interest, depreciation and tax is Rs. 961.50 million as against Rs. 607.70 million in the corresponding period of the previous year. The Company has fixed January 27, 2015 as the Record Date for the purpose of Sub-Division of Equity Shares from the Face Value of Rs. 10/- per share to Re. 1/- per share.
OUTLOOK AND CONCLUSION
At the current market price of Rs.94.20, the stock P/E ratio is at 13.12 x FY16E and 11.48 x FY17E respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.7.18 and Rs.8.20 respectively.
Operating profit and Net Profit of the company are expected to grow at a CAGR of 6% and 14% each over 2014 to 2017E respectively.
On the basis of EV/EBITDA, the stock trades at 6.58 x for FY16E and 5.96 x for FY17E.
Price to Book Value of the stock is expected to be at 1.99 x and 1.79 x respectively for FY16E and FY17E.
"We recommend ‘BUY’ in this particular scrip with a target price of Rs 108 for Medium to Long term investment", says Firstcall Research Report.
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