Is McLeod Russel a buy at this price? Profit margins have historically been 15-20% and assuming them to revert to mean on sales of Rs 1850 crore in FY16, the company should generate a net profit of Rs 200 crore plus. Current market cap is about Rs 1900 crore.
Tea prices in India are expected to rise by 15%. Volumes saw a decline in FY15 but that should pick up in FY16, especially exports.
The question is what PE should the stock be trading at?
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