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15 March 2014
1 Blog: http://dharmawat.blogspot.com/
Tata Coffee
Coffee set to taste bitter to consumers
&
sweet to shareholders
Discover the refreshing world of value pick
A presentation by: Niteen S Dharmawat
at Equity Pune gathering…
Source: http://www.dummies.com/
― Vik Muniz, Brazil
Source: http://www.dummies.com/
- Favorite Brazilian Portuguese Expression
Coffee Production…
7 Blog: http://dharmawat.blogspot.com/
Important growing factors…
Coffee Production…
8 Blog: http://dharmawat.blogspot.com/
Background…
Source: http://www.dummies.com/
- Favorite Brazilian Portuguese Expression
Brazil Coffee production under threat…
11 Blog: http://dharmawat.blogspot.com/
Acute drought…
Coffee production under threat…
12 Blog: http://dharmawat.blogspot.com/
Acute drought…
Brazil Coffee production under threat…
13 Blog: http://dharmawat.blogspot.com/
Acute drought…
Brazil Coffee production under threat…
14 Blog: http://dharmawat.blogspot.com/
Acute drought…
Brazil Coffee production under threat…
15 Blog: http://dharmawat.blogspot.com/
Acute drought…
Brazil Coffee production under threat…
16 Blog: http://dharmawat.blogspot.com/
Acute drought…
Brazil Coffee production under threat…
17 Blog: http://dharmawat.blogspot.com/
Acute drought with high temps…
Brazil Coffee production under threat…
18 Blog: http://dharmawat.blogspot.com/
Acute drought with high temps…
Source: Dr Peter Baker, CABI http://www.ico.org/news/PETER%20BAKER.pdf
Brazil Coffee production under threat…
19 Blog: http://dharmawat.blogspot.com/
Acute drought with high temps…
Vietnam Coffee production also under threat…
20 Blog: http://dharmawat.blogspot.com/
Cold and dry weather …
Other locations Coffee production woes…
21 Blog: http://dharmawat.blogspot.com/
Central America/Mexico…
Coffee Prices…
22 Blog: http://dharmawat.blogspot.com/
Pricing pressure
0
25
50
75
100
125
150
175
200
225
250
275
300
2006 2007 2008 2009 2010 2011 2012 2013 Jan-14 Feb-14
Brazilian Arabicas
Source: http://www.ico.org/
Production (145Mn) >> consumption (140Mn)
brought pricing pressure
More than 2.5 times in 5 years.
Pricing revival possibilities
Prices moving up by almost 50%
Coffee Prices… Last one year
23 Blog: http://dharmawat.blogspot.com/
Pricing pressure
Source: http://www.ico.org/
Graph as of March 12, 2014
Pricing revival possibilities
Coffee Prices v/s Tata Coffee stock: Last several years
24 Blog: http://dharmawat.blogspot.com/
Pricing pressure
Source: http://www.ico.org & http://www.bseindia.com
2006-2011: Coffee prices went up when consumption
more than production
2011-2014: Several producers jumped into the fray to exploit
opportunity leading to price crash
Imagina! (mah-zhee-nah)
English: It's no trouble at all!
- Favorite Brazilian Portuguese Expression
Source: http://www.dummies.com/
Encouraging growth nos, able to not only maintain but increase profits
Tata Coffee…
26 Blog: http://dharmawat.blogspot.com/
Consolidated Revenue and NP#s…
Parameter TTM 2013 2012 2011 2010
Revenue 1666 1708 1557 1303 1297
NP 132 116 81 73 34
NP Margins 7.9% 6.8% 5.2% 5.6% 2.6%
In INR Crores.
Parameter TTM 2013 2012 2011 2010
Revenue Growth % -2.4% 9.7% 19.4% 0.46% 15.3%
NP Growth % 13.8% 43.2% 10.9% 114.7% 61.9%
Geography Current Previous Geography Contri % Growth CIS Countries 115 179 7% -36% RoW 268 138 16% 94%
USA 1,099 1,040 65% 6% India 215 192 13% 12%
Total 1,697* 1,549* 1 10%
Source: Company Annual Report
Rupee depreciation further helps Tata Coffee…
* does not include other income.
Tata Coffee…
27 Blog: http://dharmawat.blogspot.com/ Source: Company Annual Report
Net Profit (NP) V/S Operating Cash Flow (OCF)…
Tata Coffee…
28 Blog: http://dharmawat.blogspot.com/
Shareholding Pattern (SHP)…
Source: Company Annual Report/Exchanges
Tata Coffee
29 Blog: http://dharmawat.blogspot.com/
Future: any additional points…
Entered into a coffee sourcing and roasting agreement with Starbucks to supply coffee beans to its coffee chains in India and South Asia.
Both agreed to work toward developing and improving the profile of Indian-grown Arabica coffees by elevating the stature of Indian coffee, as well as improving the quality of coffee through sustainable practices and advanced agronomy solutions.
Price of coffee will rise for one simple reason: more people in developing markets such as Brazil, India and China are acquiring a taste for it.
31 Blog: http://dharmawat.blogspot.com/
About the presenter:
Niteen is an MBA and cleared CFA Level 2, CFA Institute USA. A firm believer in long-term financial planning, and a 20 years veteran of the stock market, he likes to analyse the economy, and individual stocks. He also conducts investor education sessions.
He likes reading books/magazines/news papers on the topics as diverse as general management, technology, investment, fiction, marketing and the Gita.
He is a person who believes in "Everything else can stop but learning".
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IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and upon sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above. I sincerely request you to do your homework before you take any position whatsoever. I, my relatives or friends may have/have positions in the stocks discussed here.
