Dhunseri Tea - Emerging Star

                                        CMP Rs - 200

COMPANY PROFILE

Dhunseri Group is in Tea Business since last five decades, the Company has been a progressive, quality-focused Indian tea producer. DTIL has won the trust of its traders and consumers, in regard to the superior quality of tea it supplies. Over the years we have expanded our reach from eight estates in 2003-04 to ten estates in 2012-13 in Assam. This makes the Company one of the ten largest tea producers in India. The Company’s tea packaging and blending units are located in Dhunseri Tea Estate (Assam) and at Jaipur (Rajasthan). The Company holds the highest market share in the premium segment of packet tea in Rajasthan.The Company is also revamping these facilities so as to double the total tea sales.

 The tea produced by the Company is of superior quality Assam CTC and Orthodox teas (marketed in India through auctions and sold in packets) under LAL GHORA and KALA GHORA brands for more than 25 years. The Company has also launched another brand in the premium segment namely, BAHIPOOKRI in Rajasthan which is in 1 kg packets. The Company intends to launch a new brand-CHHOTE LAL- to cater to the lower segment of Rajasthan. The Company has always taken care to produce good quality teas at the lowest possible cost by being a progressive, quality-focused tea producer for over five decades with an advantageous location of its estates in the quality belt of Assam. In order to retain the freshness of the tea leaves, special attention is also given to the packaging.

BUSINESS EXPANSION 

To have a global reach, Dhunseri  has acquired 100% share capital of Kawalazi Estate Company Ltd and the Makandi Tea & Coffee Estates Limited (both companies based in Malawi, Africa) for a consolidated $ 22 million through its subsidiary in Singapore namely, Dhunseri Petrochem & Tea Pte Ltd. the company through its wholly owned subsidiary,  Accordingly the company has become the ultimate holding company of these two subsidiaries in Malawi, Africa. The aforesaid two subsidiaries based in Malawi, Africa in totality produce 94.50 lakh kgs of tea and 3.2 lakh kgs of Macadamia. During 2012-13, ; this marked the extension of a five-decade Indian tea company to international plantations. The two companies acquired were Makandi Tea & Coffee Estates Limited and Kawalazi Estate Company Limited. With this acquisition, Dhunseri Petrochem &Tea Ltd. has joined club of tea companies who have already made their foray in the overseas tea plantation business. With this Dhunseri group’s Tea production capacity has reached to 22 million kgs per annum. The Malawi gardens produce tea of a middling quality by tea bag manufacturers, which is a fast growing segment of the global tea segment. Besides, the Malawi acquisition has widened the Company’s offerings across the premium and middling segments, created a consistent international presence with a widening geographic footprint.

KEY FEATURES OF DE-MERGER

Demerger from Dhunseri Petrochem Limited (formerly known as Dhunseri Petrochem & Tea Limited) and Dhunseri Tea & Industries Limited (formerly known as Dhunseri Services Limited). DTIL is recently listed on BSE and NSE.

• Investor friendly company continuously  paid dividend for last 12 years.
• Low equity base - 70,04,951 share of Rs 10 FV
• High  EPS ( 9 month) Rs = 45
• Very Low Debt  around 8 Cr
• Well established in retail business with addition of new products will give further boost in EPS.
• Major acquisition and expansion is already completed so no major CAPEX in near future.
• Currently trading at P/E less than 4 as compared to industry P/E 20.8 

 

 CONCLUSION

Tea production is evergreen business in the world. The company has its own retail marketing arm with good brand name, tea estates at different locations, new products launch in different states of India, these all factors are in favor of good future growth of the company. It has all required elements to become multibagger and there is no surprise that it will trade in four figures in future.