Thursday, 9 March 2017

B&A LTD - Tea is the sector for 2017 - Value Pick



B&A LIMITED
BSE: 508136
BSE SYMBOL: BNALTD BSE CATEGORY: XD
CMP: 230-240
MARKET CAP: Around 70 Crores.
CONSOLIDATED FINANCIALS FY16:-
SALES: 157.65 Crores
NET PROFIT: 9.81 Crores
EPS: 31.65
PROMOTER HOLDING: 59.15%
CURRENT P/E AGAINST FY16 EPS: 7.50

Friends as I had expressed on 19th December 2016 on the blog in the post "Tea & Plantations up next" that TEA and Plantation stocks are going to do well in 2017. In the post I had expressed hopes for 30-60% gains in the stocks in short-term.
You can see how well the stocks mentioned have performed in just 3 months. Harrison Malayalam posted at 66, made high of 94.35. Up 42.95%. Dhunseri Tea & Industries Ltd posted at 290, made high of 325. Up 12%. Mcleod Russell Ltd posted at 149, made high of 179.75. Up 20.63%. Rossell India Ltd posted at 91, made high of 131.85. Up 44.89%.

These stocks have performed well and I take this opportunity to write about a new interesting stock in the TEA sector named: B&A LTD.

I believe TEA sector is going to be a big story in 2017, Same like what Sugar did in 2016.
As per cycle tracking, we are done with Sugar > Paper and now its turn of Tea & Plantations.

B&A Ltd is a Tea company that operates 7 Tea Estates in Assam. The company also has resorts and etc with obviously a good Land Bank.
Till latest December 2016 quarter, B&A is having a standalone EPS of somewhere near 49, last year during the march quarter price for Tea were low but this time the Tea prices are holding up strong (http://www.indexmundi.com/commodities/?commodity=tea&months=240&currency=inr) so if we assume that they declare good number of March Quarter and do the EPS of around 15 their full year number will increase to an EPS of 64 plus consolidated additional gains should be able to take it close to 68-70 so if we assume a good quarter for March 17 the Annual Eps for FY17 will close close to Rs 70.

There already are news of production cuts of Tea from Kenya and Africa and the Tea Prices are expected to show strong up-trend this year.

While other stocks have already given 35-40% returns, I believe a much bigger opportunity is there in B&A LTD because of its profit making record.

Same as Sugar at the peak of a Cycle, The P/E valuation TEA Sector can command would be in the 10-15 range so if we assume that B&A LTD can seriously clock an EPS of close to 70 the peak p/e valuation of 10-15 will give the stock a very healthy price and at 70 Crores Market Cap I guess this is one of the cheapest Tea stock with profitable records available right now around a P/E of around 7 against FY16 earnings.

A coffee, logistic, plantation stock named Aspinwall which caught the fancy of Portfolio Manager Porinju Veilyath is trading at a valuation of 20 P/E.

Technically on the charts B&A Ltd is having a 5 year pattern breakout above 268-270. Who knows if this can be another Doubler and More for Us?








Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have B&A LTD in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.

12 comments:

  1. sir your updates on harrison

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  2. Dear sir,

    Just a suggestion, it would be of immense help if you could add whether the call is for short term or long term... this one piece of advise with the calls will make a huge impact on our portfolio as well as your suggestions...

    Plz give it a thought

    Thanks and regards,
    Ravi

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    1. This comment has been removed by the author.

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  3. Can richa ind be bought now?

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  4. V2retail view please long term

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  5. Is it safe to invest when the market is flirting with the all time highs?

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  6. Diana Tea has also broken a short term range... any view for Diana?

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  7. Great analysis and a valid comparison with Aspinwal which was listed in NSE only last year . Aspinwal will celebrate this year its 150th year and there could be some expectation reg rewarding of the shareholders . Rerating of the Plantation stocks in terms of performance and also in terms of revaluation of the Land bank can have positive effect on the plantation stocks . The prices of ancillary product of the plantations like cardamon and pepper are also doing well . B&A has to break the resistance around 270 level to give a clear break out . Thanks sir Ji.

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  8. Hello one of your earlier recommendations SMRUTHI ORGANICS LTD is suspended for Trading in BSE. Any thoughts what's the future of this stock?

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  9. simply amazing pick!! B&A, Can we hold this further

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  10. Hi Ace, pretty bad numbers for the quarter for B & A.. Any suggestions why and if it changes your outlook . Thanks!

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