Tea stocks on fire after Tata buy
The Financial Express — August 25, 2006

The India Inc's biggest overseas acquisition of $677 million (about Rs 3,100 crore) by Tata Tea has created a landmark in the Indian tea industry. This has not only helped the Tata Tea stock to gain on the bourses but has provided fillip to other tea stocks also to move northwards. The Tata Tea stock opened firm at Rs 850, up by 2.65% form its previous close of Rs 827.90 and touched to intra day high of Rs 870 before closing at 832.80, posting minor gain of 0.59 per cent on BSE. Amongst the other gainers in the tea sector stocks, CCL products surged by almost 6.25 per cent at Rs 443 followed by Assam Company at Rs 23.25 up by 4.5 per cent.

Out of the about 18 tea stocks listed on the bourses, almost 50 per cent have shown a positive return compared to yesterday's close. On the basis of one-month return, most of the tea stocks have shown a double-digit growth. Surendra Singh, analyst, Anand Rathi Securities said, "There is a value unlocking happening in ex-Tata companies in the tea sector due to improved earning visibility and better transparency in the companies belonging to this sector." Many also believe that improved fundamentals of the tea industry have helped these stocks to post gains.

Says, Rajesh Jain, ED, Pranav Securities, "The tea stocks are up due to high tea prices and shortfall in the tea production". While anticipating the falling domestic tea production, the tea prices have gradually risen. The current tea prices are up by almost 18 per cent and trading at Rs 68.88 per kg compared to Rs 58.4 per kg in the corresponding period last year. India's tea production for the month of June went up by 5.2 per cent to 10.43 crore kg, compared to 9.92 crore kg in the corresponding period last year.

However, for 2006, the country's tea production in the first half was down by 3 per cent at 32.80 crore kg. According to industry sources India's full year production is expected to be lower than the expectation.