Tata Tea plans 62 mn pounds SPV for Tetley takeover

As far as its operation in the current year is concerned, lower commodity prices and poor show in the export market has put its margin under pressure. Tata Tea’s second quarter performance has been better than the first. In the second quarter the company posted a sales growth of 7.2 per cent as compared to the same period in the previous year, while in the first quarter sales had dipped by four per cent. For the first half, Tata Tea posted a sales growth of 1.4 per cent largely due to a 15 per cent growth in polypack/packed tea segment.

Tata Tea’s crop in the northern estates of the country has been affected by severe drought conditions. In the southern estates, realizations have been poor as lower export demand have pushed down prices in domestic market.

Domestic tea prices have firmed up marginally which is expected to improve the company’s performance in the third quarter. Given the fact that the company is increasing its focus on branded tea segment and that prices of the commodity is also firming up as well as the prospects of acquiring the second largest company in the world makes the company a good buy in the medium to large term.