Tata Coffee - Hot or Cold ?
Printed From: The Equity Desk
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
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1443
Printed Date: 21/Apr/2025 at 4:12pm
Topic: Tata Coffee - Hot or Cold ?
Posted By: ph_075
Subject: Tata Coffee - Hot or Cold ?
Date Posted: 10/Dec/2007 at 10:35am
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sir
so u mentioned in forum that you are looking at Tata Coffee Ltd.
you posted this in 2006 and now we are in 2008,, i just read your forum and even i have found this counter a nice investmnt oppurtunity
Now one thing which i wish to know is does Tata Coffee Ltd. still remain a buy at 266-270 levels?
Thanks
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Replies:
Posted By: basant
Date Posted: 10/Dec/2007 at 10:52am
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It looked interesting and it does now but the point is I am too wary of picking commodities because I never know when they turn back. I do not have Tata Coffee nor did I buy it.
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Posted By: shivkumar
Date Posted: 10/Dec/2007 at 11:13am
interesting write up on Tata Coffee http://nowearn.blogspot.com/2007/09/tata-coffee-can-you-smell-brew.html - http://nowearn.blogspot.com Tata Coffee-Can You Smell The Brew? Could 2008 turn out to be the year of Tata Coffee? It could. The largest private sector producer of Coffee, Black Pepper, White Pepper and Cardamom, Tata Coffee owns thousands of acres of rich, mountainous farmland in Coorg, India. With 5000 tonnes of Coffee exports per annum, Tata Coffee is also the largest-grower exporter of Coffee in the country with tie-ups that include the up-country Starbucks. Post Acquisition of the 8 "O" Clock Chain in the US, Tata Coffee is well equipped to satisfy the taste buds of the Americans. 7 out of 10 Americans are believed to be Coffee drinkers making the nation the largest Coffee drinking market in the World. Investors would do well to realise that the next boom in Real Estate will feature agricultural communes and concerns like Tata Coffee with farmland and resorts in Coorg could be key beneficiaries. The Federal Reserve cut both its federal funds rate and the discount window rate a generous half percentage point last Tuesday, in an effort to prop up a cratering U.S. real estate market, and to prevent the economy from slipping into recession. At the same time, the Fed noted that, "Some inflation risks remain, and it will continue to monitor inflation developments carefully." Heck, Fed Chairman Ben Bernanke doesn't need to look farther than his morning cup of coffee to see inflation at work. Prices are on the launch pad, up more than 6% just this past Monday! In fact, just about everything in your morning breakfast is only going to get more expensive, as agricultural commodities, led by wheat and soybeans, get swept up in a rip-roaring bull market. The good news is there are ways you can play the coming move that will perk up your portfolio with potential profits. I'll get to those in a bit. First … What's Brewing Behind the Scene in Coffee Beans? Last week, the International Coffee Organization (ICO) upwardly revised its forecast of 2007-2008 global coffee consumption to at least 122 million bags, a rise of 1.4% from 120.3 million bags in 2006. The ICO projected that coffee production would rise at the same time. However, that forecast depended on Brazil, the world's biggest producer, having a bumper crop. On Monday, Brazil dropped a bombshell: It said its main coffee-growing region is suffering a severe drought, one that will likely hurt the harvest. As a result, Brazil will reap 2.2 million metric tonnes of coffee this calendar year, down from 2.59 million in 2006, according to the Brazilian Institute of Geography and Statistics. Brazil's coffee crop has gotten punished by uncooperative weather. Brazil produces both arabica and robusta coffee beans. About two-thirds of the world's coffee is arabica, which is preferred by coffeehouse operators including Seattle-based Starbucks. Robusta beans are used in instant coffee, espresso and low-cost blends. To make matters worse, Vietnam, another big coffee producer, should see its harvest of robusta beans fall by about 3.2% to 18 million bags in the 2007-2008 crop year. Add it all up, and you can see why coffee prices took off like a rocket on Monday. Coffee isn't the only commodity that's roaring higher. Indeed, over the last month, it's only the ninth-best performing commodity! Of course, there's one country I haven't mentioned yet … China: Epicenter of an Economic Earthquake That Is Reshaping Global Markets China has seen its harvest hammered by drought. At the same time, its citizens are becoming more affluent and can afford to eat more and better food. That's why, in just the first half of this year, food prices in China rose by an average of 7.6%, led by a 70% jump in the price of pork. Beef jumped 49% … fresh vegetables sprouted 22.5% higher … and eggs rose a sizzling 27.9%. This isn't a one-month trend. This is a fundamental shift in global markets! We're used to food prices being cheap, but now we're in competition with China, India and other emerging markets for the food on our tables. They have more and more of our money every day, and they will bid up the price of just about everything at the supermarket. When you add in other NEW sources of demand — such as ethanol and other biofuels — you can see why prices could go much, much higher for a long time. The smart money is starting to get interested. Commodity guru Jim Rogers has said that soft commodities are where the biggest gains will be made over the next five to 10 years. And even Rogers could be playing it conservatively. Christopher Wyke, from fund manager Schroders, was recently quoted as saying … "After coming out of a quarter-century bear market in agricultural and soft commodity prices, we are now at year one of a 20-year bull market." How to Perk Up Your Own Profit Potential With coffee prices percolating higher, you might want to buy one of the companies that will be brewing up profits. Starbucks is the big daddy of coffee, of course, and with 13,000 coffee shops in more than 35 countries, the sun never sets on its revenue stream. It will probably be able to pass along price hikes despite griping from consumers, because millions of its customers need their daily fix. And by some metrics, this king of the coffee shops still looks cheap. Another taster's choice would be Green Mountain Roasters. It roasts about 100 varieties of arabica coffee, which it sells to more than 8,000 wholesale customers including supermarkets, convenience stores, and office coffee services. And Finally it has to be Tata Coffee-the owners of the 8 "O" Clock chain in the US and a key ally of Starbucks. |
Posted By: FutureBull
Date Posted: 12/Jun/2013 at 11:24pm
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This company's earnings have gone up 5x in 5 yrs. They are expanding production quite handsomely going forward. They export a lot as well which should benefit a lot from INR depreciation. I do not understand what changed for the stock to fall 20%. Coffee prices have been falling to 3 yr lows but that is good for coffee processors like Tata Coffee. Titan's fall would impact Tata Global Bev. to some extent but this company is completely isolated. I don't know what is missing here. If fundamentals are intact this is a very good price to own this business ------------- ‘The market always does what it’s supposed to — BUT NEVER WHEN’. |
Posted By: tigershark
Date Posted: 12/Jun/2013 at 7:34am
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at what level have they hedged the dollar? maybe it could be due to that forex losses coming up in july.maybe
------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: rohit1889
Date Posted: 13/Jun/2013 at 1:57pm
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HEARD on the Street
Tata Coffee,Bata Tumble as Operators Dollar Bets Misfire Top stock operator Bob-DA,known for his short-selling skills,is caught on the wrong foot.His huge short positions on the dollar have backfired as the greenback has risen almost 7.5% against the rupee since May.Stock brokers who funded the Mumbai-based operator against shares,are liquidating his collateral as Bob-DA has failed to provide additional margin money to cover his losses.Bob-DAs woes with margin financiers are said to be among the key reason for an 8% crash in Bata on Tuesday and 20% in Tata Coffee on Wednesday.Bob-DAs stake in the counter rivals that of other big shareholders in the company.He was said to be busy covering his short bets in Havells India,which gained 5.46% on Wednesday to close at Rs746 on NSE. Rajesh Mascarenhas & Palak Shah ------------- If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won't get bored. |
Posted By: FutureBull
Date Posted: 13/Jun/2013 at 10:17pm
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Thanks Rohit, so my apprehension was right this is not related to fundamental. I was in the middle of reading the latest annual report and this happened. On first look, This is on the cusp of a non-linear profit growth despite moderate sales growth. ------------- ‘The market always does what it’s supposed to — BUT NEVER WHEN’. |
Posted By: rohit1889
Date Posted: 13/Jun/2013 at 10:35pm
Welcome Futurebull ji. Please post your findings so that all others can chip in.
------------- If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won't get bored. |
Posted By: FutureBull
Date Posted: 13/Jun/2013 at 10:55pm
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Sure, this is no longer a pure commodity play. These guys have built durable brands over the last 5 yrs and time to reap dividends is now. Recession or no recession folks would drink coffee. If not at Starbucks somewhere else. Tata Coffee is Asia's largest instant coffee maker.
ROCE has increased to 26% in FY13. Div. payout ratio is also going up now for FY13 it is 37% which is not bad considering that capex needed is not that high going forward. I got interested only when I saw Shankar Sharma talking highly about it. He said this could be $5 bn company in times to come. I have still not found reason to be so bullish. I would post if I find anything game changer. This is a good FMCG play no doubt about that. ------------- ‘The market always does what it’s supposed to — BUT NEVER WHEN’. |
Posted By: rajivsubra
Date Posted: 14/Jun/2013 at 4:04pm
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Futurebull, when a good FMCG play drops 30% relative to the market, I think its time to buy. It reminded me of:
"In 1964, the “salad oil scandal,” where a vegetable oil company obtained massive loans through falsified collateral rocked American Express, which had provided warehouses and vouched for the company’s inventory. This event ended up costing the company approximately $58 million and much of its reputation. In the period after the scandal broke, investors couldn’t sell AXP shares fast enough, and the stock lost 50% of its value in a short time, falling to $35 per share. Buffett, however, saw this moment of panic for just what it was – a drawback for an otherwise very stable company with long-term growth potential. Buffett observed people beginning to use credit cards in their daily transactions, and recognized AXP’s potential to become an American blue chip. The Berkshire Hathaway CEO purchased shares with a cost basis of $1.28 billion. As of December 31, 2009, the company’s 151.6 billion shares are worth more than $5 billion, an unrealized gain of $3.7 billion and an increase of 290%. Berkshire Hathaway currently owns 12.7% of American Express." http://247wallst.com/2011/01/21/warren-buffetts-greatest-investments-of-all-time/#ixzz2WBRbQ6wZ |
Posted By: tejas.k
Date Posted: 14/Jun/2013 at 4:23pm
| i think the listed company tata coffe doesn't have any consumer facing products. their website doesn't mention any. i think all the products, including starbucks come under tataglobalbeverages |
Posted By: FutureBull
Date Posted: 14/Jun/2013 at 8:50pm
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Inccorrect! They do have brands.
see this link below. I agree the website is very clumsy and old style. They have International Tata Café, Mysore Gold and Malabar are the popular Instant Coffee brands which are exported. Check link for domestic brands. http://www.tatacoffee.com/products/conventional_coffee/domestic_brands.htm Apart from that iconic Eight O'clock coffee in US and through a JV they have introduced vitamin beverages in US. The Starbucks venture is split into two. The front end is 50:50 venture between Tata Global and Starbucks while Tata Coffee would supply high premium coffee products for their Indian/international venture. ------------- ‘The market always does what it’s supposed to — BUT NEVER WHEN’. |
Posted By: FutureBull
Date Posted: 14/Jun/2013 at 9:00pm
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I agree sometimes one needs to follow his/her guts to take the plunge. I am still not over with my emotional connect with stocks. Anyway, I am not over with my conviction building exercise so no regrets.
I learnt that they have plantation trails where you could book coffee resorts in the middle of huge green plantations. Let me know if any of you have visited. I am pushing one of my friend to make a visit to Coorg  . Let's see.
------------- ‘The market always does what it’s supposed to — BUT NEVER WHEN’. |
Posted By: rajivsubra
Date Posted: 15/Jun/2013 at 12:53pm
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They own the 8o'clock brand http://www.tatacoffee.com/subsidiary/subsidiary_eight.htm
But they dont seem to make enough noise about it, and the FMCG portion of their story is hardly present in their investor communication.
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Posted By: jagbir
Date Posted: 15/Jun/2013 at 2:03pm
I visited one of their resorts: http://plantationtrails.net/cottabetta_bungalow_coorg.php - cottabetta, coorg and experience was amazing!! highly recommend to visit for 1 or 2 days.  ------------- I find that the harder I work, the more luck I seem to have. |
Posted By: grim
Date Posted: 24/Jun/2013 at 11:23am
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Tempting price. Tata Coffee@ 140, does it make it cheap enough to risk a bite, does the business have some mid term upside potential? |