Tata Coffee goes cold

Tata Coffee continues to remain down in the red. It opened some 20 paise higher, only to slip into red, hitting an intra day low at Rs.930.10. It currently remains 1.3% down.

A subsidiary of Tata Global Beverages, which holds 57.48% stake , the stock has gone cold after its set of disappointing numbers for Q1FY15. A 45% (YoY) drop in its consolidated net profit at Rs.42 crore did not go down too well with the traders. Its net revenue also showed a fall – 12% down at Rs.374 crore. The company has explained that the lower profits in this quarter primarily reflect the lesser crop available for sale in the plantations business, on account of the lower production of coffee, tea and pepper during the previous season, which had witnessed distinctly unfavourable weather conditions.

The company has called this an “off-cycle” year which means seasons where coffee trees have lower yields. It is a seasonal thing and the company is facing the brunt of the same. The only solace was that its instance coffee business did well good volume growth of 20% (YoY) at 1836 tonnes. The instant coffee business reported a topline of Rs.86 crore v/s Rs.76 crore in previous Q1, driven mainly by sales to newer geographies.