The Hindu Business Line : Tata Tea back in favour

TEA stocks have apparently regained some of their lost colour on the bourses as the uncertainty over the lack of rainfall in parts of southern and northern tea growing regions has ended.

The Tata Tea stock on Monday moved up on the major bourses with increase in volumes.

On the NSE, it was 1.77 per cent at Rs 340.05 with a volume of 2.12 lakh (89,360) shares. On the BSE, it had traded quantity of Rs 1.1 lakh (10,352) shares.

According to brokers and industry sources, the tea prices had seen fluctuations in the past 6-8 weeks due to reports of lack of rainfall in south India and Assam in March.

Things have however, improved in the last couple of weeks.

The auction and private buyers in Kolkata and Coonoor confirmed that rainfall in April has, by and large, removed the apprehension of a shortage, particularly in the arrivals of first flush.

Tea trade sources said that the Assam variety tea had seen marginal shortfall in the March and prices had also hardened a bit, but the situation has changed for the better in April.

On the other hand, Darjeeling tea is reported to be fetching better price than the same period last year.

Trading sources in Coonoor suggested that compared to the January-end prices, February-March prices were on an average higher by 10-15 per cent. "April onwards, prices have started coming down," they added.

According to Mr Ketan Thacker of Anagram Stockbroking, Tata Tea, which has a presence in Assam and in the southern region, is aggressively tapping the overseas market.

This being an additional trigger, the market has taken note of a new Assam tea launch plan in the UAE. It is also moving into the Chinese market through Tetley.

The Tetley brand is already present in Pakistan, Bangladesh and Russia.

Today's delivery-based trading (52.5 per cent of the total trading on the NSE was placed for delivery) suggested medium-to-long-term investment buying in the counter.

At the closing price, the stock traded at 25 times its trailing four-quarter earnings per share.

The stock's 52-week high is Rs 420 and low is Rs 189.