Goodricke- can it be really good?

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Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
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Printed Date: 02/May/2025 at 7:11am

Topic: Goodricke- can it be really good?

Posted By: tyler_durden
Subject: Goodricke- can it be really good?
Date Posted: 21/Feb/2007 at 12:31pm

Goodricke Group, the third largest tea-producing group in India, manages century-old tea gardens acrosss the tea-growing regions of Darjeeling, Dooars and Assam. The group owns nearly 10,000 hectares of plantations spread over 30 tea gardens.

Goodricke Group Ltd is a part of the UK-based Camellia that owns tea gardens in Kenya, Malawi, Bangladesh and Nepal.

registered office is in kolkata so basant ji might not like it.

EPS is rising for past 4 years consistently

cmp 72, mcap 160 crores, p/e = 14, eps = 5.33, past year pe range 20- 55, bv = 31

Groups: Tea

Company        Last Price        Market Cap
Tata Tea        666.00           3,931.40
Parry Agro Ind   1,400.00        526.40
Tata Coffee      274.00           511.83
Assam Company    20.10            449.44
Bombay Burmah    312.00           435.55

2003 eps = -3.8
2004 eps = 1.49
2005 eps = 1.74
2006 eps = 2.28 (expected)

2003 PAT = -82 crores
2004 PAT = 32 crores
2005 PAT = 37.6 crores
2006 PAT = 50 crores approx (expected)

board will announce a dividend on 28 feb 2007.

P A Leggatt Chairman
K S David Managing Director & CEO
B N Ghosh Managing Director
A K Mathur Director
S Kaul Director
K Sinha Director
D P Chakravarti Company Secretary
P K Sen Director
Kalyanbrata Palchoudhuri Non Executive Director
A N Singh Managing Director
M C Perkins Director

tea and coffee demand are increasing,

experts please comment...

Replies:

Posted By: basant
Date Posted: 21/Feb/2007 at 12:49pm

The problem that investors face in these kind of companies is the cyclical nature of the business. Generally the stock appears expensive on a PE basis but I think that tea is not yet in the upcycle (not sure since I do not follow the Tea industry so well) higher PE's in cyclical stocks makes for a case for buying the stock.

SO before we can conclude anything on whether to buy Goodricke or stick to Tata Tea it becomes essential to predict with a reasonable degree of accurancy on where the Tea industry is headed. Tata Tea is reducing its exposure to the vagarise of the Tea industry and is concentrating on branding and marketing of Tea.

The wonderful thing that investors of tea and sugar and coffee and cement and steel experience is that a rising tide lifts all boats. That means that if cement will do well so will India cement and so will shree cement. The question is one of magnitude rather then direction.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: tyler_durden
Date Posted: 21/Feb/2007 at 1:00pm

the PE range for 2005 was 32.79 - 55.75
the PE range for 2004 was 19.13 - 44.97

so currently its 13.88 and financially company looks good. i agree with you that it has a cyclical nature of business. but if tea cycle comes and PE rerating happens it could grow 2-3 times.

of course the thing is when will the tide come??

Posted By: s_praharaj
Date Posted: 21/Feb/2007 at 10:46pm

Goodricke group is a very old tea compnay.

Qualitatively, it has the best tea gardens in Darjeeling.

There are two gardens of Goodricke in Darjeeling, the tea of which fetches the highest amount in the auctions in Germany.

But please see the price of the stock in last 20 years.

It has not appreciated at all.

You can not predict the cyclical stocks and Basant is 100% correct on it.

Rest is your decission.

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Shashi Praharaj

Posted By: tyler_durden
Date Posted: 21/Feb/2007 at 10:07am

i agree... thanks a lot for your valuable inputs...

Posted By: Vivek Sukhani
Date Posted: 06/Mar/2009 at 6:17pm

Goodricke has done me proud..........by announcing a 3 coins a ticket as dividend.

The results are pretty nice as well:

http://www.bseindia.com/qresann/results.asp?scripcd=500166&scripname=Goodricke%20Group%20Ltd&type=60.5&quarter=DC2007-2008&ResType=&checkcons - http://www.bseindia.com/qresann/results.asp?scripcd=500166&scripname=Goodricke%20Group%20Ltd&type=60.5&quarter=DC2007-2008&ResType=&checkcons =#

Its now left to Goodyear to do the finishing act.....although a cut is quite likely yet anything above 3.5 to 4 coins a ticket will be perfectly acceptable in the current environment.

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Jai Guru!!!

Posted By: Vivek Sukhani
Date Posted: 06/Mar/2009 at 10:25pm

Originally posted by s_praharaj

Goodricke group is a very old tea compnay.

Qualitatively, it has the best tea gardens in Darjeeling.

There are two gardens of Goodricke in Darjeeling, the tea of which fetches the highest amount in the auctions in Germany.

But please see the price of the stock in last 20 years.

It has not appreciated at all.

You can not predict the cyclical stocks and Basant is 100% correct on it.

Rest is your decission.

I missed this thread altogether.....

Thanks Basant Sir, for guiding my post here.....

The two gardens which Shahshi Sir is mentioning are Badamtam and Barnesbeg, I guess. Thurbo is one of the biggest gardens in darjeeling Valley.

Overall, a wonderful company....quite niche.....less talked about, but goes quietly going about its task.....

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Jai Guru!!!

Posted By: Hitesh Shah
Date Posted: 06/Mar/2009 at 10:34pm

http://myiris.com/shares/company/chartShow.php?icode=GOOGROUP&cSelect=2 - Here is a chart for the last ~ 5 years. Looks like it has delisted from the NSE.

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Posted By: Vivek Sukhani
Date Posted: 06/Mar/2009 at 10:38pm

Yes.......rightly so. No point in paying listing fees given the liquidity of this stock.

You will be surprised to know that even Nestle is not there on NSE.....at least this is what my dealer told me.

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Jai Guru!!!

Posted By: Hitesh Shah
Date Posted: 06/Mar/2009 at 10:42pm

Originally posted by Vivek Sukhani

Yes.......rightly so. No point in paying listing fees given the liquidity of this stock.

You will be surprised to know that even Nestle is not there on NSE.....at least this is what my dealer told me.

Nestle, Novartis, Ultramarine, Goodyear, Balmer Lawrie Investments, Riddhi Siddhi Glucobiol also that I know of.

But even "illiquid" stocks show more volumes on the NSE from what I can gather.

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Posted By: Vivek Sukhani
Date Posted: 03/May/2009 at 11:22pm

http://www.livemint.com/2009/04/07222811/Goodricke-Group-to-sell-just-5.html - http://www.livemint.com/2009/04/07222811/Goodricke-Group-to-sell-just-5.html

If tea sector does well, which in all likelihood it should, this stock has all the potential to scale newer and newer highs. Among all BSE/NSE listed stocks in the tea sector, this is perhaps the best stock to be in. Mcleod has size, but somehow is too heavily concentrated in Assam. Jayshree is quite diversified to reap the benefits of the upturn in tea sector and so is Gillanders Arbuthnot. Dhunseri is way too small.

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Jai Guru!!!

Posted By: atulbull
Date Posted: 04/May/2009 at 8:10pm

Goodricke to launch 'ready to drink' tea

Kolkata: Goodricke Group will introduce its first ready-to-drink tea this calendar year, as part of its strategy to double growth from the packet tea segment in the next three years.

Part of Camellia Plc of the UK, one the of the largest plantation companies in the world, the Goodricke Group in India produces about 33 million kg from its plantation spread across Dooars, Darjeeling and Assam.

"We are seeking government permission for producing RTD from the instant tea export-oriented unit. The unit, in fact, holds patent rights on hot water and cold water soluble instant teas," managing director and CEO AN Singh said on Tuesday.

The company, which is in the process of reorganising its packaging facilities, has set a target of putting 10 million kg of tea in packets in three years from 6 million kg at present.

Goodricke has maximum market share in central India including Madhya Pradesh, followed by Punjab and Haryana. "In the year, price realisations have been good but the increase in costs has offset the gains due to higher prices. We estimate an approximate reduction in costs by almost 5% once we reduce to decrease the transaction of teas through the broker channels," Singh said. The company routes almost 60% of its teas through the auction system.

source: DNA

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Price is what you pay.Value is what you get.

Posted By: Vivek Sukhani
Date Posted: 05/May/2009 at 3:26pm

http://teaboard.gov.in/weekly.asp?param_link_id=41010 - http://teaboard.gov.in/weekly.asp?param_link_id=41010

The prices of tea has been consistently going up. The first flush teas have yet to hit the Calcutta auction and thats likley to add further strength......

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Jai Guru!!!

Posted By: Hitesh Shah
Date Posted: 17/Jul/2009 at 5:59pm

Two views on Mcleod Russel

http://moneycontrol.com/mccode/news/article/news_article.php?autono=406551&special=today&utm_source=MarketsHP-Interviews_MC&utm_medium=Moneycontrol.com - One

http://moneycontrol.com/india/news/stocks-views/mcleod-russel-notlong-term-play-p-sekhar/402208 - Two

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Posted By: Vivek Sukhani
Date Posted: 18/Jul/2009 at 12:08pm

Originally posted by Hitesh Shah

Two views on Mcleod Russel

http://moneycontrol.com/mccode/news/article/news_article.php?autono=406551&special=today&utm_source=MarketsHP-Interviews_MC&utm_medium=Moneycontrol.com - One

http://moneycontrol.com/india/news/stocks-views/mcleod-russel-notlong-term-play-p-sekhar/402208 - Two

Mcleod may be a trading bet, but tea as a commodity is in a fundamentally very strong position.

Show this to Mr. P Shekhar:

http://teaboard.gov.in/weekly.asp?param_link_id=41010 - http://teaboard.gov.in/weekly.asp?param_link_id=41010

The problem is, people have too much history in their head. You dont have to be a rocket scientist to figure out the windfall which the standing inventory can fetch you. The good tea estates, which can restrict the output fall in the region of 15-20 p.c. can produce absolute stellar kind of a result. Look out for companies which are majorly exposed in Doars. Darjeeling can have some problems though......

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Jai Guru!!!

Posted By: Hitesh Shah
Date Posted: 18/Jul/2009 at 12:16pm

My reason for waking up so late to this sector is that I just hate the way the price I pay for tea is rising & rising & rising.

With my luck in investing, I feel I have the power to reverse any rising trend by buying in ... So let us see if the price of a tea company share is related to the price of tea, buying a few shares may do the trick. (Pl. don't analyse this too deeply.)

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Posted By: Hitesh Shah
Date Posted: 18/Jul/2009 at 12:18pm

Originally posted by Vivek Sukhani

....

..... Look out for companies which are majorly exposed in Doars. Darjeeling can have some problems though......

Way, way over my head. Isn't most overseas trade denominated in dollars? And the Darjeeling point ... Confused

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Posted By: Vivek Sukhani
Date Posted: 18/Jul/2009 at 7:37am

Doars is a major tea producing area of India. We divide Northern India crop into 3 segments....Darjeeling, Doars and Assam. Doars has bore the brunt of the drought to the maximum. Darjeeling's first flush has been a failure but they can do well in the second flush, rains and autumns.

This year, prices will not be an issue but the crop volume is what holds the key. The good point about tea is thats free of government intervention. Its an item of addiction yet the government doesnt mind its increased consumption.

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Jai Guru!!!

Posted By: Hitesh Shah
Date Posted: 18/Jul/2009 at 7:56am

Originally posted by Vivek Sukhani

Doars is a major tea producing area of India. We divide Northern India crop into 3 segments....Darjeeling, Doars and Assam. Doars has bore the brunt of the drought to the maximum. Darjeeling's first flush has been a failure but they can do well in the second flush, rains and autumns.

Thank you for clearing that up! I really thought Doars was a typo for Dollar Embarrassed

.

So, which tea company has the most diversification in terms of geography? McR seems to have acquired plantation in Viet Nam.

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Posted By: Vivek Sukhani
Date Posted: 19/Jul/2009 at 1:09pm

McR has the scale advantage, but I think they are hardly present in darjeeling. Goodricke is virtually absent in Assam. Jayshree is also reasonably diversified...infact they have some estates in the South as well.

Tea is a very simple industry. It faces an industry-wide problem but there's hardly any company specific problem for a standalone tea company.

Coming to McR, their acquisitions in Vietnam is nothing but a small step towards its aim of becoming a behemoth. The only way to grow is by acquisitions. Otherwise, the kind of tea which Assam throws, you cannot get it anywhere in the world.

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Jai Guru!!!

Posted By: Hitesh Shah
Date Posted: 19/Jul/2009 at 1:52pm

Originally posted by Vivek Sukhani

...Otherwise, the kind of tea which Assam throws, you cannot get it anywhere in the world.

I think Sri Lankan tea also has a great reputation. I don't know how the years of turmoil there has affected tea plantations.

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Posted By: Vivek Sukhani
Date Posted: 19/Jul/2009 at 8:09pm

Originally posted by Hitesh Shah

Originally posted by Vivek Sukhani

...Otherwise, the kind of tea which Assam throws, you cannot get it anywhere in the world.

I think Sri Lankan tea also has a geat reputation. I don't know how the years of turmoil there has affected tea plantations.

I was talking in terms of output. Quality-wise, darjeeling teas get you the best of prices. Yield is less for darjeeling, but quality is quite superior.

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Jai Guru!!!

Posted By: hit2710
Date Posted: 23/Jul/2009 at 8:38pm

Hi

I looked up the quarterly results of tea companies and it seems Sep and Dec quarters are the best quarters for them. Tea prices are on an upward swing and hence I think best time for tea stocks is yet to come. I like what I see of Goodricke group with little debt. I also feel jayshree tea looks good.Although it has more debt as compared to goodricke.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: Vivek Sukhani
Date Posted: 23/Jul/2009 at 11:41pm

Originally posted by hit2710

Hi

I looked up the quarterly results of tea companies and it seems Sep and Dec quarters are the best quarters for them. Tea prices are on an upward swing and hence I think best time for tea stocks is yet to come. I like what I see of Goodricke group with little debt. I also feel jayshree tea looks good.Although it has more debt as compared to goodricke.

Jayshree is into fertilisers, its into chemicals....its more diversified. At this moment, the only tea company I find worth investing is Diana Tea.

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Jai Guru!!!

Posted By: hit2710
Date Posted: 23/Jul/2009 at 9:57am

Hi
There does not seem much to lose in Diana TEa as recent low was around 15.5 and currently around 17.5. But any fundamental details available? And where do they have their chai bagaans? If you have some insight please share it. I find the stock interesting.

Otherwise being a cyclical, sector tailwinds are bound to push the stock up.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: hit2710
Date Posted: 23/Jul/2009 at 10:24am

Regarding diana tea I found the following

company has been consistently reporting profits with eps in the range of 2.74 for Dec 08 year end. Current market cap is around 27 crore. They have made a loss of 4.48 crore in March 09 quarter.

dividend paid for fy 08 was 0.25 rupee per share. Face value per share is Rs 5. d/e ratio is below 1 since last three years. their plantations seem to be in West Bengal.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: hit2710
Date Posted: 23/Jul/2009 at 11:23am

Hi

diana tea seems to be the fancy of the day up 6-7 percent.I started buying into it.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: Vivek Sukhani
Date Posted: 23/Jul/2009 at 11:25am

Originally posted by hit2710

Hi

diana tea seems to be the fancy of the day up 6-7 percent.I started buying into it.

....and in the process denying me my booty at lower prices.

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Jai Guru!!!

Posted By: hit2710
Date Posted: 23/Jul/2009 at 11:53am

Originally posted by Vivek Sukhani

Originally posted by hit2710

Hi diana tea seems to be the fancy of the day up 6-7 percent.I started buying into it.

....and in the process denying me my booty at lower prices.

Same here. sara gaon lene nikal pada hai.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: Vivek Sukhani
Date Posted: 23/Jul/2009 at 11:56am

Originally posted by hit2710

Hi
There does not seem much to lose in Diana TEa as recent low was around 15.5 and currently around 17.5. But any fundamental details available? And where do they have their chai bagaans? If you have some insight please share it. I find the stock interesting.

Otherwise being a cyclical, sector tailwinds are bound to push the stock up.

Diana has 4 estates, all in Jalpaiguri District in the Doars. Among the North Indian teas, prices have appreciated the maximum for doars. However, dont know how much is the production fall.

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Jai Guru!!!

Posted By: hit2710
Date Posted: 26/Jul/2009 at 3:33pm

Goodricke has all the makings of a big multibagger in the next 2-3 years, looking at the tea prices and company management and them launching readymade tea.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: hit2710
Date Posted: 27/Jul/2009 at 2:22pm

TEA STOCKS REVVING UP TODAY? ANY NEWS OR IS IT JUST A FLASH IN THE PAN?

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: Hitesh Shah
Date Posted: 29/Jul/2009 at 3:30pm

http://in.reuters.com/article/companyNews/idINBOM48742620090728 - McLeod Russel sees tea prices down 10 pct in 3 months

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Posted By: Vivek Sukhani
Date Posted: 29/Jul/2009 at 3:46pm

Originally posted by Hitesh Shah

http://in.reuters.com/article/companyNews/idINBOM48742620090728 - McLeod Russel sees tea prices down 10 pct in 3 months

Normal phenomenon....the second flush and the rains would be hitting the markets in 3 months time. Its also the time when these companies make the 'hay'.

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Jai Guru!!!

Posted By: toad848
Date Posted: 08/Apr/2010 at 1:58am

Hello,

I'm doing my research on Goodricke, and would like to have a look at the profiles (education, experience etc.) of A.N. Singh (CEO), D.P. Chakravarti (Sr. GM), and A. Sengupta (CFO). The information I've been able to find thus far has been sketchy at best, so if anyone has these profiles, I'd very much appreciate your posting them on this board or sending them to me at mailto:[email protected] - [email protected] .

Thank you in advance.

Varun

Posted By: Vivek Sukhani
Date Posted: 07/Jun/2010 at 8:35am

Some things to be considered before buying Goodricke:

1.Production is on the decline steadily.

2.Management doesnt reply to good questions asked at the AGM( I have attended their last 2 AGMs).

3.Being a MNC affiliate, they arent too keen on expansion, and all talk about expansion seems to be just a lip-service.

4.The social costs at the gardens are more than the average norm.

But the advantages surely outweigh the negatives:

1.Price to book value multiple is below what it has been available at 'normally'.(My last acquisition price at 38-39 was the place where BV was almost to the Price, almost about 15-17 months back)

2.Earnings multiple is also below what it trades at, 'normally'.

3.Balance Sheet is in the best shape than what I have seen in the last 7 years.

4.Because of Point#3, expect the borrowings cost to be significantly lower than last year.

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Jai Guru!!!

Posted By: hit2710
Date Posted: 17/Jun/2010 at 9:54am

Originally posted by Vivek Sukhani

Quality teas can get sold at dearer levels while overall markets may be subdued. Low quality teas may remain unsold while markets may be pretty firm. Quakluty tea producing companies should be treated moree as FMCG play rather than as commodity play.

Would goodricke qualify as No 1 quality tea producer in India? Or would the tag go to macleod or someone else?

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: karn
Date Posted: 18/Jun/2010 at 2:24pm

I have one observation. While looking at financials, it seems that we have missed the bus and have to wait for more 3-4 years. I do not understand cyclicals, hence I could be wrong. Does anyone here follow tea companies?

Year 2009 to 1989
Profit 41.94/17.59/7.74/5.50/3.75/3.22/
-8.28/0.66/0.87/0.69/12.60/22.59/
11.14/3.28/1.75/3.74/
10.38/6.61/8.43/13.60/12.24/4.06

Posted By: mangai
Date Posted: 18/Jun/2010 at 3:32pm

Hi Ppl.. I am new to this forum and to the stock market.

I have recently invested in 2 stocks. Someone please advise me as to whether it was a good decision or not!!!!

1) Ballapur Industries

2) Cranes Software Ltd.

Posted By: excel_monkey
Date Posted: 18/Jun/2010 at 4:16pm

Hi Vivek,

what is your call on Duncans after the disposal of the fertilizer business?
should it now be treated as a tea company?
Your views as TED's Tea industry analyst/expert would be highly appreciated.

Thanks in advance
Excel

Posted By: Vivek Sukhani
Date Posted: 18/Jun/2010 at 9:09pm

Originally posted by excel_monkey

Hi Vivek,

what is your call on Duncans after the disposal of the fertilizer business?
should it now be treated as a tea company?
Your views as TED's Tea industry analyst/expert would be highly appreciated.

Thanks in advance
Excel

Would avoid Duncans.

The move to dispose fertiliser business would be nothing more than a life-support. From here, to get back to normal health would call for a very tall effort....which I suspect GP Goenka Group isnt capable of.

Accounting-entry wise, it does interesting.....they will hive off assets and prune liabilities at the same point of time....but what about the negative P/L. Their balance sheet would still look very awkward and they have to do some restructuring.

I dont know, but a plant lying idle for so many years getting reasonable valuation looks pretty remote.

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Jai Guru!!!

Posted By: excel_monkey
Date Posted: 18/Jun/2010 at 9:18pm

Thanks Man
your views are always helpful
I was just wondering why would JP be interested in the plant
is it about 200+acres of real estate in Kanpur?

Posted By: Vivek Sukhani
Date Posted: 18/Jun/2010 at 9:21pm

Originally posted by excel_monkey

Thanks Man
your views are always helpful
I was just wondering why would JP be interested in the plant
is it about 200+acres of real estate in Kanpur?

Must be......otherwise there's simply no synergy between their businesses.

But how would they tackle the emplyees and workers.

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Jai Guru!!!

Posted By: atulbull
Date Posted: 18/Jun/2010 at 11:14am

http://www.bseindia.com/stockinfo/anndet.aspx?newsid=%7BB0278427-C5C3-454B-8F45-A6BF6C4B0383%7D&param1=1 - Goodricke Group - Financial Results for Mar 31, 2010

http://www.goodricke.com/GGL%20FIN%20RESULT%20310310.PDF - Quarterly Results - 31st March 2010

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Price is what you pay.Value is what you get.

Posted By: hit2710
Date Posted: 18/Jun/2010 at 11:45am

Originally posted by atulbull

Quarterly
Results - 31st March 2010[/URL]</td></tr></t></table>

The production is higher by 22% by march 2010 as compared to last year inspite of dry conditions and tea prices are firm. This indicates, this year also might be good for the company.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: atulbull
Date Posted: 22/Jun/2010 at 11:04am

http://www.businessweek.com/news/2010-06-22/tea-shortage-to-worsen-as-pests-damage-crop-in-india-update1-.html - Tea Shortage to Worsen as Pests Damage Crop in India

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Price is what you pay.Value is what you get.

Posted By: prabhakarkudva
Date Posted: 23/Jun/2010 at 2:40pm

Some Info:

Recent reports from the industry have claimed that the already existing tea shortage in India could worsen due to pest attacks and heavy rains. This could potentially reduce output and boost the prices. Output in India, the second largest grower after China is expected to be less than last year’s 979 million Kilograms.

Excess rains have hurt tea shrubs in northeast states, which account for more than 70% of production. Northeast India, including Assam and Darjeeling, got rain for 78 of 90 days, causing so-called tea mosquitoes to destroy the leaves. A smaller harvest may increase the domestic shortage by around 25% to as much as 75 million kilograms by the end of 2010.

The average tea price was $2.43 per kilogram at the weekly auction held in Kenya’s port city of Mombasa on June 14 and 15, 18 percent more than the $2.06 per kilogram a week earlier. In India, prices have risen by 15 rupees to 20 rupees a kilogram from a year ago as producers cover their future needs by purchasing at auctions.

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Take your chances and keep them in a box until a quieter time.

Posted By: subu76
Date Posted: 23/Jun/2010 at 3:32pm

Prabhakar, have you read anything about the demand part? Supply issues obviously even out over time.

Posted By: prabhakarkudva
Date Posted: 23/Jun/2010 at 3:56pm

Deleted.Repeat Post.

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Take your chances and keep them in a box until a quieter time.

Posted By: prabhakarkudva
Date Posted: 23/Jun/2010 at 4:09pm

Have a look at this-> http://en.wikipedia.org/wiki/List_of_countries_by_tea_consumption_per_capita

Demand should remain constant or at best grow at single digit rates.

My sense is that in any commodity company we ought to be playing a demand-supply mismatch.I dont think this is a long term secular growth kind of a story, unless they strengthen existing brands and show some pricing power.

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Take your chances and keep them in a box until a quieter time.

Posted By: subu76
Date Posted: 23/Jun/2010 at 5:07pm

I see......Thanks a lot.

But don't you think playing a supply demand mismatch (as opposed to a secular trend) will be extremely difficult for non experts in this area.

Posted By: prabhakarkudva
Date Posted: 23/Jun/2010 at 5:55pm

Yes and although it might not be the best attitude that is precisely why i am staying away

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Take your chances and keep them in a box until a quieter time.

Posted By: subu76
Date Posted: 23/Jun/2010 at 5:56pm

Same here...unable to get fully convinced without finding out very compelling stats...... Still looking at a leisurely pace....

Posted By: hit2710
Date Posted: 23/Jun/2010 at 6:08pm

Originally posted by prabhakarkudva

Yes and although it might not be the best attitude that is precisely why i am staying away

Another factor which needs to be considered while investing here is that while production shortfall may cause rise in prices, the reduced production may dent the sales of the company. And if some kind of pest plays havoc, one never knows how much damage it can cause.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: subu76
Date Posted: 23/Jun/2010 at 7:46pm

Yeah...was planning to read data about this company and some competitors to see if any of these things happen.

Hitesh, do you have any idea if these events are real possibilities?

Posted By: Vivek Sukhani
Date Posted: 23/Jun/2010 at 7:53pm

In a country like ours, nothing stays in demand-supply match for long....so I guess we cannot ever think long-term thinking along those lines 'alone'.

The stocks which will give you the most incredible returns will be the ones who you discover cheap and who has a feature of regular consumption( that may or may not grow, but most importantly, it shouldnt decline). Now, to obtain great returns, we not have to only meet the second condition, but we have to meet the first condition as well.

I think the concern talked about by Hit makes a great sense. We have to concerned about standalone garden companies and focus on companies which have a wider geographical plantation base.

Just think about it.....at a time when we are paying 5-10 times turnover for FMCG companies, we are not paying one time turnover for Goodricke. What we are ignoring is that the balance sheet is in the best shape in the last 10 years.....Just think, we are paying for consumer companies in big big multiples to their book values, we are trying to get them at sub-2 p.c. dividend yield then why not consider stocks which hav the feature of regular consumption of their finished goods, but not perceived as fast moving available at pretty decent fundamentals.

Consumer companies can also be rank under-performers.....there's no consumer company in India having a bigger basket of brands than HUL. But track its performance over the last 10 years.

What looks great at the moment may turn out to be pretty dud. Nothing is predictable beyond a point....we cannot figure out competition with accuracy, we cannot figure about demographics with accuracy, we cannot figure about technological change with accuracy. Nothing in stock markets remain hot for ever, and nothing remains cold for ever. What you try to do is avoid getting into the hottest stocks ready to be placed into the refrigerator and not avoiding the coldest stocks just placed on the burner.

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Jai Guru!!!

Posted By: subu76
Date Posted: 23/Jun/2010 at 8:00pm

Hi Vivek,

I have this thesis....correct me if I'm wrong.

Energy prices will rise for a long time at varying rates and with varying fluctuations given that energy sources are relatively limited and consumption is growing.

Will it be possible to form any such secular theories on tea prices?

Posted By: nav_1996
Date Posted: 23/Jun/2010 at 8:52pm

Tea needs couple of years to grow to give tea leaves. Tea can not be grown anywhere, so area for tea plantation is pretty limited as far as India is concerned. Most of the area under tea cultivation in Nilgiri range was obtained by removing forest about 100 years back. Now you can not cut even a tree without Mr Jayram's permission.

Posted By: subu76
Date Posted: 23/Jun/2010 at 9:42pm

Hey nav_1996, Do you have an idea about how this data point looks for the world......though Goodrick seems to be primarily India focused at this point

Posted By: kulman
Date Posted: 23/Jun/2010 at 10:01pm

Originally posted by Vivek Sukhani

What you try to do is avoid getting into the hottest stocks ready to be placed into the refrigerator and not avoiding the coldest stocks just placed on the burner.

Interesting.

Posted By: Vivek Sukhani
Date Posted: 23/Jun/2010 at 10:58pm

Originally posted by subu76

Hi Vivek,

I have this thesis....correct me if I'm wrong.

Energy prices will rise for a long time at varying rates and with varying fluctuations given that energy sources are relatively limited and consumption is growing.

Will it be possible to form any such secular theories on tea prices?

........But can you therefore hypothesize that Energy stocks will continue to rise for a long time at varying rates and with varying fluctuations?

Stocks( I mean stock prices) dont map the commodities in entirety. The direction may be identical in most of the cases but magnitude is not. Tell me, Jayshree Tea and Mcleod fell 40 p.c from their peak, but have tea prices fallen 40 p.c.???Similarly, from the bottom these stocks rose almost 8 times, but did tea prices rise 8 times?

That again makes me go to the first point I mentioned.....look for good business at cheap enough entry rates. And dont forget, tea prices dont have too much of a speculative element....therefore chances of it falling like a rock is very remote, until and unless it shoots up like a rocket first.

Also, I dont know whether one should look at tea like a necessity or a luxury....but if you do take it as a necessity, these stocks wont falter in the long run.

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Jai Guru!!!

Posted By: Jaishrikrishna
Date Posted: 23/Jun/2010 at 11:18pm

Tea, TO DIN KA STARTER HAI BHAI, ITS A NECESSITY ATLEAST FOR SOMEONE LIKE ME.

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Don't Buy and Hold, Buy and Homework / Fish see the bait,but not the hook; Men see the profit, but not the peril.

Posted By: excel_monkey
Date Posted: 23/Jun/2010 at 12:26pm

Vivek
would you prefer Goodricke over Jayshree?

Posted By: nav_1996
Date Posted: 23/Jun/2010 at 12:56pm

I am yet to understand Jayshree getting into Sugar.Other things I don't like is them being in chemicals.

Posted By: subu76
Date Posted: 23/Jun/2010 at 1:26am

Originally posted by Vivek Sukhani

........But can you therefore hypothesize that Energy stocks will continue to rise for a long time at varying rates and with varying fluctuations?

Also, I dont know whether one should look at tea like a necessity or a luxury....but if you do take it as a necessity, these stocks wont falter in the long run.

Thanks a lot Vivek....Your points are extremely helpful

Posted By: Vivek Sukhani
Date Posted: 23/Jun/2010 at 7:43am

Originally posted by excel_monkey

Vivek
would you prefer Goodricke over Jayshree?

Between them I would always prefer Goodricke.

The first use of cash from operations is to re-inforce the balance sheet. Use it for fixed asset acquisition, use it for debt repayment, use it for dividend, but dont use it to go into new businesses.

Infact, the best company in this space would be Mcleod. It does see lot of speculation though.....but this is very aggressive. They had the guts to acquire gardens, merge other tea companies during nt so good times, and now they are reaping the fruits.

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Jai Guru!!!

Posted By: excel_monkey
Date Posted: 24/Jun/2010 at 9:11pm

Vivek
I think Nirma is a company which is cold and would be on the burner soon
Quoting at an attractive price to cash earnings ratio of 5
Great brands and other good productive assets

Originally posted by Vivek Sukhani

In a country like ours, nothing stays in demand-supply match for long....so I guess we cannot ever think long-term thinking along those lines 'alone'.

I think the concern talked about by Hit makes a great sense. We have to concerned about standalone garden companies and focus on companies which have a wider geographical plantation base.

Consumer companies can also be rank under-performers.....there's no consumer company in India having a bigger basket of brands than HUL. But track its performance over the last 10 years.

Posted By: Vivek Sukhani
Date Posted: 26/Jun/2010 at 8:49am

Nirma should be okay, but am not so sure about how great would be the investment in this company.

They have gone into way too many businesses, some of which are allied and some unallied to their cash generating business of detergents and soaps. I am also holding a few tickets of Nirma, and am not in any hurry to sell them, but am not finding it exciting enough to load up more.

But one thing I must say is that companies should continually invest in strengthening their main business if there is scope. Just look at ITC....while HUL is busy in monetising its assets, it is acquiring assets and building up facilities and capacities in practically all of its business. HUL is finding no better use of cash but to do nominal buybacks, ITC is using it to spur future growth. I am going through ITC's Annual Report for 2009-2010 and I am experiencing a greater sense of investor delight as I turn pages.

Nirma also has added capacities, but its marketing effort has become pretty ordinary. As a shareholder I would like to for companies which takes on competitors and turns the heat on them. Nirma fails in that. Its a value for sure, their American acquiition of trona mines should hold them in good stead. But I want them to hit HUL with force. PnG( unlisted arom of PnG) is walking away with the kill, and Nirma, it seems is remaining a mute spectator to this. If PnG is going all guns blazing to kill Surf and Rin, Nirma should try to do the same to Wheel.

Fincials-wise, I am unable to locate a cheaper FMCG company that Nirma. And thats why I would stick with it. But Nirma shouldnt just stop at that....

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Jai Guru!!!

Posted By: excel_monkey
Date Posted: 27/Jun/2010 at 3:22pm

Originally posted by Vivek Sukhani

Nirma should be okay, but am not so sure about how great would be the investment in this company.

Fincials-wise, I am unable to locate a cheaper FMCG company that Nirma. And thats why I would stick with it. But Nirma shouldnt just stop at that....

true
the same old Karsanbahi magic is missing
as well as they have become more of a commodity company as a result of acquisitions
but still all the business (commodity of otherwise) of the company are globally competitive and in fact some are cost leaders

Posted By: subu76
Date Posted: 27/Jun/2010 at 11:13pm

Nirma's ads also lack the flair of old time...it also seems to be a misfit in beauty soaps category with their chubby new model

Posted By: subu76
Date Posted: 27/Jun/2010 at 11:14pm

Not sure if we have discussed this before:

One important negative for Goodricke is the presence of sister concerns in the same area. Who knows what bouncer this company can throw at any point of time.

All negatives said and done...the stock price does seem extremely cheap .....

Strangely it never made any money for folks who bought this one when the thread started though the picture is a lot better now.......

Posted By: Vivek Sukhani
Date Posted: 27/Jun/2010 at 9:55am

Originally posted by subu76

Not sure if we have discussed this before:

One important negative for Goodricke is the presence of sister concerns in the same area. Who knows what bouncer this company can throw at any point of time.

All negatives said and done...the stock price does seem extremely cheap .....

Strangely it never made any money for folks who bought this one when the thread started though the picture is a lot better now.......

Well, my average acquisition price would be nearly 50-55 rupees and I sold almost a third of my holding between 112-174. So, I guess I am still quite deep in money, even though the price may not be as attractive as when it was 190+.

As far as your doubts go, these are the sterling companies, into existence for a very long while. Its too sleepy a company to make all those smart moves to transfer estates from one company to another.

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Jai Guru!!!

Posted By: subu76
Date Posted: 27/Jun/2010 at 10:13am

Hey Vivek, at your yield of 6-7% why sell this off at all. Surely, you see this company as an entity which is likely to have much much better days ahead....the yield is also likely go up significantly when that happens..No?

Posted By: Vivek Sukhani
Date Posted: 28/Jun/2010 at 8:30am

Originally posted by subu76

Hey Vivek, at your yield of 6-7% why sell this off at all. Surely, you see this company as an entity which is likely to have much much better days ahead....the yield is also likely go up significantly when that happens..No?

Well, I do swap for dividends. If I wuld have sold Goodricke, I would have moved for something which must be offering me still higher yield. I dont remember exactly what I bought with Goodricke, but I am very much sure it should have been offering me higher yield. Very very raely you would find me trading where there is loss in dividends.

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Jai Guru!!!

Posted By: bihisello
Date Posted: 28/Jun/2010 at 9:49am

There is article on Goodricke on the site that cannot be mentioned hence no link!

Posted By: subu76
Date Posted: 28/Jun/2010 at 10:07am

Originally posted by Vivek Sukhani

Thanks Vivek, I'm asking so many question to help me develop conviction on this one or to sell off what i have and move on

Posted By: Vivek Sukhani
Date Posted: 28/Jun/2010 at 11:01am

Originally posted by subu76

Originally posted by Vivek Sukhani

Thanks Vivek, I'm asking so many question to help me develop conviction on this one or to sell off what i have and move on

No issues Sir.....

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Jai Guru!!!

Posted By: Vivek Sukhani
Date Posted: 29/Jul/2010 at 10:23pm

deleted

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Jai Guru!!!

Posted By: subu76
Date Posted: 24/Dec/2010 at 3:31am

This company has continuously rewarded shareholders with increased dividends when it's performance underwent an upturn. Contrast this with Warren Tea which did not pay any dividend in 2010 (a bumper year for tea companies)....offcourse it claims to have done so in the long term interests of it's share holders

Posted By: excel_monkey
Date Posted: 24/Dec/2010 at 4:08am

Aditya Khaitan of McLeod Russel believes that the tea prices are going to be strong

http://www.moneycontrol.com/news/business/whereteapricesheaded_507840.html

Posted By: subu76
Date Posted: 24/Dec/2010 at 9:52am

Excel Sir...do you have any sense for tea prices and how it behaves in general and the demand/supply?

Mr. Khaitan has been making this point for some time...while he talks about supply/demand being the key driver it looks more like industry consolidation is causing tea prices to move up

Posted By: subu76
Date Posted: 24/Dec/2010 at 9:58am

Originally posted by excel_monkey

Aditya Khaitan of McLeod Russel believes that the tea prices are going to be strong

http://www.moneycontrol.com/news/business/whereteapricesheaded_507840.html

Finished reading now...Very very interesting interview......

Thanks for posting.....

Posted By: excel_monkey
Date Posted: 24/Dec/2010 at 10:15am

Subu ji
Tea being a commodity is like a s@x worker hence can not be trusted
yet there are a few positives for tea

1. It is very hard to set up a new plantation of a decent size (land and environmental clearance etc)
2. it takes 5 years for tea plant to mature to reap tea leaves
3. there has been massive under investment in tea plantations in last 10 years
4. tea demand has been growing consistently (3.5% in India)
5. Tea is an emerging market bottom of pyramid consumer drink i.e. high growth
6. General asset price inflation should also effect the tea prices

I would be positive on tea

I had written a note some 3 years back here under my old Avatar "tyro" -

http://www.theequitydesk.com/forum/forum_posts.asp?TID=1039&KW=jayshree+tea&PID=32876#32876

Posted By: bsk0404
Date Posted: 24/Dec/2010 at 10:56am

Some one told me that tea plant takes 12-14 years to mature. you said 3.5 years. i dont know any thing about the tea plantation. other thing do you know the listed name of C somabhai's tea of ahmedabad.

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There are only 2 tragedies in market 1st buying a good stock at wrong price 2n buying wrong stock at any price.

Posted By: subu76
Date Posted: 24/Dec/2010 at 11:24am

Originally posted by excel_monkey

Subu ji
Tea being a commodity is like a s@x worker hence can not be trusted
yet there are a few positives for tea

1. It is very hard to set up a new plantation of a decent size (land and environmental clearance etc)
2. it takes 5 years for tea plant to mature to reap tea leaves
3. there has been massive under investment in tea plantations in last 10 years
4. tea demand has been growing consistently (3.5% in India)
5. Tea is an emerging market bottom of pyramid consumer drink i.e. high growth
6. General asset price inflation should also effect the tea prices

I would be positive on tea

I had written a note some 3 years back here under my old Avatar "tyro" -

http://www.theequitydesk.com/forum/forum_posts.asp?TID=1039&KW=jayshree+tea&PID=32876#32876

The comparison is interesting

Hmm.....But isn't your s*x worker point and being positive on tea point are somewhat contradictory?

I've thought a lot about tea stocks and have been unable to swing one way or the other.....

Here is a graph on tea prices over the years Link http://www.mongabay.com/images/commodities/charts/tea.html - Tea prices over the years

So it seems that tea prices are at 10 year highs..

Offcourse, that not to say prices will not rise further....

My point is that if tea prices rise Goodricke will be a huge huge winner...but I'm finding it hard based on my limited knowledge about this sector to figure out if prices will continue it's uptrend

Do you think tea prices will continue to rise?

Posted By: excel_monkey
Date Posted: 25/Dec/2010 at 6:55pm

I have been stalking Jayshree (Tea

) since 2003 when it touched Rs. 22 levels
and ultimately bought it at 93 (all prices adjusted for bonus) in early 2008
I had to go through some pain in the carnage but the tea prices held up and now I am in profit (not that decent when compared to consumer plays)

With regards to the prices they are just an optical illusion

The house where you stay is up 5 times in last 10 years
The meal which you buy is up 6 times in last 10 years
All other agricultural commodities are up several times in last 10 years
The capital and operational costs across the industries, products and commodities have gone up several times in last 10 years
Our income has gone up several times in last 10 years
There are barriers to entry in this business in India (land acquisition and time it takes to start a plantation)
Demand and supply scenario is favourable

Why shouldn’t the tea prices go up?

Originally posted by subu76

The comparison is interesting

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