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Accumulate - Accumulate Tea Stocks for Investment purpose- Rashmikaul1980

From : Rashmi Kaul at 10:35 AM - Feb 08, 2010 ( )
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Respected Sir
 
Keep a watch on Tea Stocks.
 
Sugar prices have been on a high for some time now, This year (2010) is also expected to be a year when sugar prices will soar and hence earnings of sugar companies are expected to remain good.
 
Sugar is a well known story but another crop where the deficit is expected to widen and thus earnings of companies should go up is that of tea. The crop, as estimated in September 2009, was to have a deficit of around 110 million kgs but as per the latest estimate, this is now set to widen to 130 million kgs. And the shortage of crop is to go down in 2011 as well. So when demand exceeds supply, naturally prices have to go up and this means earnings of the three largest tea companies of India – Tata Tea, McLeod Russel and Jayshree Tea will also soar in together.
India, Sri Lanka and Kenya are the world’s largest tea suppliers. These 3 countries together, account for 70% of the world’s tea production. Crop in these areas has been hit due to dry weather, there by curtailing overall world supply of tea. On the other hand, demand for tea is going up in in India, Middle East, Pakistan, UK, Ireland and Europe.
Production in India, till October 2009 was down on a YoY from 832. 5 million kgs to 830.4 million kgs. To keep up with the demand in India of 3%, the shortfall visible even right now is of around 35 million kgs. Kenya’s tea output, from Jan to Nov 09’ dropped 9% to 278 million kgs and that of Sri Lanka, was down 12% at 263.8 million kgs for 2009.
In 2010, demand is expected to grow by around 30 million kgs while the gap between the demand and supply is expected to be at 65 million kg in 2010. None of these 3 companies in India have the capacity to fill even a part of this gap. Thus prices, which had soared to a high of $3.18 a kilogram in September, compared to an average price of $2.38 per kilogram in 2008, are expected to go up even further or at least remain at the current high levels through 2010. Prices of Assam tea in India, which in 208 was at around Rs.65 per kg, was almost doubled up at Rs.130 per kg in 2009. Price is expected to remain at more or less the same levels for 2010.
Obviously, going by the performance of tea companies till end of 2009, the going is expected to be remain on a high. Interestingly, as per data available on the website of Tea Board of India, till end of September 2009, though India exported 19.02 million kg lower, it earned Rs.95.25 crore more. This obviously means realizations are high.
In India consumption is currently increasing at the rate of 3% per annum. At this rate, from being a net exporter of India presently, the likely trend emerging is that over the next 8-9 years, India can turn into a net importer.
I feel Tea and sugar stocks are what one should accumulate in this market fall.
I would suggest that also please take advice from senior members of our beloved Mudra.
Regards
Rashmi
 



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From : Rashmi Kaul at 01:16 PM - Mar 11, 2010 ( )


Wait for the following prices as these would be little safe levels to enter the stocks. Tata Tea @ 870, Mcleod Russel @ 200 and Jayshree Tea @ 280. Since we have to hold it for 6-12 months, these price would be little safer to enter the said stocks.





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From : Is Kakar at 11:25 AM - Mar 11, 2010 ( )


Very nice sector pick Rashmi ji and that too well ahead of others ... Congrats.





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From : Wasim Shaikh at 11:20 AM - Mar 11, 2010 ( )


thanks rashmiji for your recommendation and good study on tea stocks.i will bye tatatea.





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From : Rashmi Kaul at 11:15 AM - Mar 11, 2010 ( )


I again reteriate my call - HOLD TEA STOCKS FOR NEXT 6 MONTHS.





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From : Subhasish Bhattacharya at 10:13 PM - Feb 14, 2010 ( )


Great research and beautiful in-depth analysis, by the way where you got all these information?





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From : Yogesh Mahale at 01:29 PM - Feb 08, 2010 ( )


Dear mam please suggest about 2 scripts for next 8months period, Dhunseri Tea, and Warren Tea......





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From : Bala Palniappan at 12:49 PM - Feb 08, 2010 ( )


tea stocks and Kansainerolac up in this down market.good keep it up. as it is investment call.





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From : Rashmi Kaul at 11:06 AM - Feb 08, 2010 ( )


you are right sir..... looking at the shortage of Tea Stocks globally and demand rise in India, i believe that all the tea sector stocks should out perform Jayshree tea happens to be well positioned as of now along with Mcleod Russel and Tata Tea.





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From : Ravi Jain at 11:03 AM - Feb 08, 2010 ( )


i think jay shree tea is best among rea stock, what do u think





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From : Bisal Jain at 10:52 AM - Feb 08, 2010 ( )


Thanks, 
        Rasmi Kaul





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From : Prachand Narendra at 10:51 AM - Feb 08, 2010 ( )


dear rashmi, what buying price you would recommend for these 3 mentioned stocks. thanks in advance.




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