Tea stocks extend rally; Goodricke Group, Warren Tea up over 50% in a month

Harrison Malayalam and McLeod Russel India were up more than 10%, while Jay Shree Tea, Dhunseri Tea, Goodricke Group, Warren Tea and Rossell India were up between 5% and 10% today

Shares to tea producing companies continued their upward movement on expectation of rise in tea prices on the back of declining production.

Harrison Malayalam and McLeod Russel India were up more than 10% in intraday, while Jay Shree Tea, Kanco Tea, Dhunseri Tea, Goodricke Group, Warren Tea, B&A and Rossell India rose between 5% and 10%, against 0.84% decline in the S&P BSE Sensex.

In past one month, the stock prices of Goodricke Group, B&A, Diana Tea, Warren Tea and Harrisons Malayalam have zoomed more than 50%, while McLeod Russel India, Jay Shree Tea, Dhunseri Tea, Tata Global Beverages and Kanco Tea were up in the range of 25% to 48% on the BSE. On comparison, the S&P BSE Sensex was up marginally by 0.23% during the period.

As per Tea Board India data, production in North India in September declined by 42 million kg. Apart from Assam, tea production in the Dooars and Terai regions of West Bengal also went down by around nine million kg "owing to climatic adversities".

It is expected that the annual production shortage this year in Assam is likely to be around 5% of last year's production. In view of this, the prices are expected to firm up in the coming months; IANS report suggested quoting North Eastern Tea Association's Advisor and former Vice Chairman of Tea Board India Bidyananda Barkakoty. CLICK HERE TO READ FULL REPORT
 

Meanwhile, McLeod Russel hit its fresh 52-week high of Rs 248, up 13%, bouncing back 21% from early morning lows, after promoter of the company sold over 9% stake in the company through open market. The stock was down 6% to Rs 205 on the BSE in intra-day trade.

“Kamal Kishore Baheti, in his capacity as the Trustee for Borelli Tea Holdings Limited, informing that he has sold 10 million equity shares of Rs 5 each representing 9.14% of the paid-up share capital of our company today through market trades at the current market price,” McLeod Russel India said in a BSE filing.

The name of buyers not ascertained immediately. However, according to market sources, the institutional investors have bought the shares from open market.

“Globally, CY16 witnessed record tea production led by increased production in both Kenya and India. However, since the start of calendar year 2017 (CY17), weather conditions are getting adverse. Hence, Kenya’s tea production is already down by 43 mkg till Aug-17. This decline in production has positively impacted the Mombassa auction prices, which have increased around 25% YoY to US$2.86/kg for 9MFY18,” analysts at ICICI Securities said in McLeod Russel’s result update.

The brokerage firm believes that with better export environment, McLeod Russel would focus on improving exports and would report healthy growth on a low base. It expect export revenue to clock 30.0% CAGR in FY17-19E.

COMPANY	LATEST	1-MONTH BEFORE	GAIN(%)
GOODRICKE GROUP	510.00	290.15	75.77
B & A	365.55	212.00	72.43
DIANA TEA	30.45	19.30	57.77
HARRI. MALAYALAM	121.85	80.25	51.84
WARREN TEA	177.75	117.70	51.02
MCLEOD RUSSEL	241.25	163.80	47.28
JAY SHREE TEA	140.70	97.80	43.87
DHUNSERI TEA	353.10	272.00	29.82
ASSAM CO. (I)	6.64	5.13	29.43
TATA GLOBAL	284.80	225.95	26.05