Tata Global brewing strong

Tata Global Beverages is brewing up a strong flavor today, currently up almost 1.5% at Rs.148.70, with an intra day high at Rs.149.10. It still remains a but far away from its 52-week high of Rs.174.35.

The stock is looking good today as there are reports which suggest that with softening tea prices, the company could benefit in terms of better margins and higher volume growth. Good weather has led to a good crop in Kenya and India, causing a glut like situation. Kenya’s tea output is up 23% during Jan-Oct period, Sri Lanka’s output rose 3% and in India, North India showed a 8$ rise and South remains flat. On the other hand, prices have dropped due to the good crop. In Kenya, prices have come down 29% (YoY) and in India, auction prices in North India has dropped 3% and down 8% in South.

This bodes well for Tata Global which buys tea and its procurement cost will go down, which the company could pass it on to the consumers and thus spurt volume sales.