Tata Tea: Best Stock 2009Tata Tea, Indian Tea giant offers one of the best opportunities for long term investment in 2009. Ofcourse every stock no matter which sector is prone to sharp drop in prices if the recession becomes very severe, but Tata Tea is certainly among stocks which stand the best chance to give good returns in 2009. This stock was mentioned in my post on Best and Safe Indian Stocks to invest in 2009.

Financials of Tata Tea
Tata tea is currently being traded at a price of Rs. 600 or a P/E ratio of about 2.2 - at the time of writing this post. Click on Latest P/E ratio of Tata Tea to know more about current status. Looking at the past one year performance of Tata Tea - the stock has lost about 28% value in one year as shown by the following price volume chart.
Tata Tea- price volume chartAlthough a 28% drop in past one year may not look encouraging, remember that Nifty and several other stocks have lost over 50% value in the past one year. There have been stocks which have gained about 30% during this period- but they are being traded at very high P/E of around 30. The reasons why i have included in the list of Best Indian stocks for 2009 are the following :
  1. The stock is being traded at a P/E of 2.2 - so is really cheap.
  2. Tea Business , unlike real estate or automobile , is relatively less affected by economic downturns.
  3. Tata Tea reported a 69% drop in Net consolidated profit - which is not very good- but still this drop in sales is already accounted for in its low price. (Note the 10% rise in standalone profit does not mean anything- one should always look at consolidated results).
I think one should invest in this stock only from the long term point of view - and as always - i would advice not to put all your money in one stock. Diversification is the key to avoiding risk and remaining relatively safe - especially in times of recession like this.

Jan 30, 2009

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