Sector Specific - Tea Companies
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Sector Specific - Tea Companies (updated - 04 Dec 2009)
Global tea shortage may be headed for an unprecedented level of 140 million kg, up from the earlier anticipated 100 million kg.
The deficit in Africa and Sri Lanka stands at 70 million kg, while India is likely to end the year with a shortage of 50 million kg. Factoring in a pipeline shortage of 25 million kg for India at the beginning of the season earlier this year, the industry is staring at a shortage of a little more than 140 million kg.
According to statistics, during January-September, world tea production stood at 1,275.5 million kg, down by about 89 million kg. India’s tea production till September had dipped by 10 million kg. However, industry representatives pointed out that exports were likely to end the year higher by 6 million kg. “If we take a lion kg and an annual consumption increase by 30 million kg, then we have a shortage of about 50 million kg. Add to it a pipeline deficit of 25 million kg from the opening of the season and we have a shortfall of 75 million kg,” they said.
Prices were currently higher by about Rs 30 a kg in the domestic market. Good Assam tea was hovering around Rs 140 a kg compared to Rs 110 akg same time last year. Industry sources also said that the weather had suddenly gone dry and it was likely the season could close by the second or third week of December against a normal December-end. The industry experts also do not expect that shortfall across the world could be made up for at the moment.
Given the current scenario, expectations for the next season are running high. The industry expects prices to appreciate by another Rs 30 a kg in the new season. For the first time, the shortage was across
Please note - Taking into consideration Tea shortage the companies related to teas manufacturing sector will be beneficial once the prices start increasing, the stock prices also increase.
Tea Sector Companies - Tata Tea, Mcleod Rus, Parry Agro Ind, Tata Coffee, Assam Company, Bombay Burmah, Goodricke Group, Jayshree Tea, Warren Tea, Harrisons Malay,CCL Products, Dhunseri Tea, Gillanders Arbu, B and A, Duncans Ind, Joonktollee Tea, Diana Tea Co, Terai Tea Co Ltd, Asian Tea Expo, Neelamalai Agro, Tyroon Tea Co, Tezpore Tea, Assambrook, Longview Tea, Ledo Tea
Tea stocks above 100% returns (updated - 31 Dec 2009)
There is a lot of cheer from the cuppa not just for producers but for investors as well. The tea industry, whose fortunes improved dramatically in 2009, following a good demand, lower domestic output and a global production deficit, has brought windfall gains for investors in the stock market rally.
Stocks of leading tea companies have surged by about 200% to 450% since March 9, when the markets after hitting a new low began the current phase of the rally. Tea scrips have given some of the best returns in the ongoing rally beating the benchmark indices by more than 100%.
McLeod Russel, the largest tea producer in the country, which is snapping up tea companies in Africa, has seen the maximum gain with its scrip vaulting 454% between March 9 and December 24. The stock price of Harrisons Malayalam, one of the largest tea cultivators in the south, has more than trebled during the period.
Jayshree Tea and Industries, a B K Birla group company, another major producer, has given 381% returns, followed by Assam Company and Dhanushri Tea, that gained 198% and 188% respectively since March.
Sensex and Nifty have given 113% and 101% returns since March 9. Barring a few sectoral indices such as metals, tea stocks have outperformed other broader indices.
“There has been a good improvement in domestic demand. After many years of decline, we have started to see growth,” says a senior industry official. The average prices at weekly auctions have jumped 30% to Rs 112.18 per kg between January and November.
“Demand has been stronger than before. It has been a fairly good year but we couldn’t get the full benefit of high prices due to the fall in production,” says a top official with a leading south-based tea production company. Inclement weather conditions have hit production in all major growing countries and global production has dropped by about 70 million kgs (mkgs) so far this year driving up prices at all major auction centres.
Though export volumes have come down, they have registered a 4.4% increase in value terms in January-October with unit realisation improving by Rs 22 per kg, reveals available data.
