Tata Coffee - Key conclusions

- 14% growth for the last two years in sales
- Russia consolidation helping; more focus on other geographies leading to margin expansion but lower volumes
- RoCE is anaemic; Key reasons:
--Huge amount of goodwill in Fixed Assets; I would prefer to take a knock on the book and compute core ROCE
--Despite this RoE is awsome - lower cost of debt; 6% and Net exporting company therefore currency depreciation impacting positively
--Also, debt/equity is still relatively high i.e. 1.5:1
-- Valuations below historical mean - should get out after 20% price increase; switch to Bajaj Corp! Need better return metrics
--PAT CAGR of 15% over the next 2 years! Like all the Jazz but need more!

Consolidated	200703	200803	200903	201003	201103	201203	201303
Net Sales	746	977	1,114	1,286	1,301	1,549	1,697
Total Income	751	986	1,127	1,300	1,308	1,557	1,708
Total Expenditure	627	805	956	1,048	1,052	1,357	1,381
PBIDT	124	182	171	252	256	200	327
PBIT	107	151	141	215	221	146	275
PBT	43	72	70	152	170	100	222
PAT	32	40	39	74	110	84	158
Cash Profit	53	70	69	105	146	121	198
Sources of Funds
Equity Paid Up	19	19	19	19	19	19	19
Reserves and Surplus	337	319	316	353	411	494	604
Net Worth	335	319	319	359	420	504	613
Total Debt	919	866	970	783	743	738	915
Application of Funds
Gross Block	1,351	1,289	1,566	1,436	1,444	1,627	1,730
Investments	47	82	20	8	6	5	118
Cash and Bank balance	65	28	49	64	20	30	55
Net Current Assets	179	175	100	130	110	113	111
Total Current Liabilities	199	241	348	310	315	325	426
Total Assets	1,661	1,616	1,883	1,699	1,685	1,840	2,149
Cash Flow
Cash Flow from Operations	141	128	136	215	88	193	171
Cash Flow from Investing activities	(1,116)	(38)	41	(2)	3	(27)	(181)
Cash Flow from Finance activities	1,033	(127)	(157)	(198)	(139)	(155)	28
Free Cash flow
Ratios
No. of Shares	1.9	1.9	1.9	1.9	1.9	1.9	1.9
Market Capitalization			448	394	279	672	1,799	1,560	2,760
Tax	11	32	32	78	61	16	64
NFA + NCA ex Cash			1,550	1,506	1,814	1,627	1,660	1,805	1,976
Price	239	210	149	359	962	834	1,476
	29%	26%	15%	41%	108%	86%	140%
Returns
RoE	#N/A	12%	12%	22%	28%	18%	28%
ROCE	#N/A	8%	7%	8%	10%	7%	11%
Interest cost		10%	8%	9%	7%	7%	6%
Multiples
P/E	13.8	10.0	7.2	9.1	16.4	18.7	17.5
EV/EBITDA	10.1	6.3	6.9	5.5	9.8	11.3	10.7
Dupont
PAT/Sales		4%	3%	6%	8%	5%	9%
Sales/Assets		60%	59%	76%	77%	84%	79%
Assets/Equity		5.1 x	5.9 x	4.7 x	4.0 x	3.6 x	3.5 x