Saturday, February 25, 2012

JAY SHREE TEA - BUY

















Jay ShreeTea is a member of BK Birla group and one of the largest tea producers in Asia. In addition to 10000 hectare tea estates  at various parts of India ,company recently acquired some plantations in African countries.Currently company  having 22 tea estates in India and 3 abroad. Company also producing Single Super Phosphate , Sulphuric Acid and Sugar .Its sugar factory is located in Bihar with  a capacity of 5500 TCD. Company’s tea brands are Kanchenjunga, Classic Pure, Golden Caddy, Sadabahar, Shaandar, Kalline Gold and Jaandar. Due to lower tea prices and even lower sugar prices company posted very bad numbers in last quarter. It could not pass the effects of increased input costs and labour costs to its customers mainly because of the over supply situation in world tea markets. But this situation is expected to change in the upcoming season .Supply shortage is expected in India due to adverse weather conditions in next season which will begin in March.India’s tea consumption is increasing in an average rate of 3-4 % per year  but no significant addition in tea plantations.Entry of bigger brands like Starbucks to India  is expected to change the tea consumption culture of Indians going forward. Tea prices in world market is also expected to improve due to production shortage in Kenya .This big producer  has lost a significant part of its tea production this year due to severe frost in key growing areas.All these factors are expected to lead an increase  in Tea prices in the new season even in world tea markets.In the case of sugar , it already bottomed out and trading even below its  production cost .Some positive steps are expected from government side to save this industry in near future. After a short period of decline in Tea prices and a long period of fall in Sugar prices both these commodities are expected to rebound shortly .Jay Shree tea is one of the best choice available due to its presence in both these sectors .Medium to long term investors may consider it @ CMP of Rs.91/-

20 comments :

  1. Dear Value Pick Ji

    Thank you for your Valued Recommendations

    Yours

    S.Venkateswaran
    Dharmapuri
    Tamil Nadu

    ReplyDelete
  2. Dear VP Sir,

    What is you view on the below mentioned stocks:

    Punjab alkalies and checmical
    Bilcare
    Lloyd steel

    ReplyDelete
    Replies
    1. Dear Varun
      Not tracking PACL and Lloyd steel.If ready to take some risk, may consider BILCARE around Rs.200/-

      Delete
  3. SIR SHOLD WE START BUY IN ENKEI WHEEKS AT 40-45 RS.

    -THANKS-
    TK

    ReplyDelete
    Replies
    1. Buy Enkei wheels if you have patience to wait at least two years.

      Delete
  4. dear value
    jayshree has huge debt and not a big market share in indian tea market and starbucks already tied up with tata tea. are these factor not cause of concern?
    PATIDAR

    ReplyDelete
    Replies
    1. Dear Patidar
      Many of our investors are much concerned about debt.At a time of high interest rates this concern is genuine upto some extent.But it is a fact that a growing company at its growth stage always need capital either through equity or debt .So I don't think debt itself is a sin but we should much concentrate on whether the company have enough cash flow to meet debt obligations.

      Regarding the entry of Starbucks , I don't think Tata tea will plant any additional tea gardens to meet the supply.If there is an increase in demand because of starbucks that will be met from their existing plantation .Such an additional demand in Indian market will help all other companies too .
      If you mentioned the competition side, I think the customers are two different class

      Delete
  5. Sir

    What is your view on OK Play India? New plant getting operational in march 2012.

    ReplyDelete
    Replies
    1. I don't think the promoters of OK play is atleast above average.

      http://timesofindia.indiatimes.com/city/chandigarh/PSCST-director-2-IAS-officers-among-12-held/articleshow/4646957.cms

      Delete
  6. Hello Valuepick sir.. do you think Avanti Feeds is a good buy at this level? Looks like it has got stagnated at near 100/- since a long time, is it the right time to buy it now?

    Please reply
    Warm regards
    Reshma

    ReplyDelete
  7. Try to buy below Rs.90 in any correction.This business is seasonal in nature and significant upside may be possible only after one more quarter ,so patience required.

    ReplyDelete
  8. HELLO VALUEJI I WANTED UR VIEW ON ATLAS CYCLE IF ITZ A BUY TIME FRAME?

    ReplyDelete
    Replies
    1. It is already trading at premium valuations due to operator interest.I prefer Tube Investment over Atlas Cycle from the same sector.But sharp fluctuation can't be ruled out in Atlas on account of operator play.

      Delete
  9. Sir,
    What is your present view on Elder healthcare. It has forayed into facewash segment recently. Q3 performance is also good.

    ReplyDelete
  10. Sir,

    Please recommend some PSU bank stocks for long term at current level.

    Thanks,
    Gaurav

    ReplyDelete
    Replies
    1. Allahabad bank is a good choice from PSU banking sector

      Delete
  11. Dear Debashish

    Based on Results , Elder is good.But I feels some big share holders who are holding more than 1 % is desperate to exit .In a low volume counter such supply demand mismatch will take some long time to get absorbed.

    ReplyDelete
  12. Dear Sir

    What is your view on Mirza International at cmp?

    Thanks
    AD

    ReplyDelete
  13. Sir,
    Gateway distriparks showing good strength. what is your view on this company

    ReplyDelete

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