Tata Coffee’s leveraged buy-out of the US based Eight O’Clock Coffee (EOC ) from Gryphon Investors for US$ 220 million, is by now known to all investors. What is probably not known is that Tata Coffee recently floated “Alliance Coffee Ltd ” a marketing JV company with Beeyu Overseas Ltd. Beeyu overseas will hold 49% of Alliance Coffee’s Rs. 8 crore equity.Beeyu is listed on BSE and is available at Rs. 10. I strongly recommend a BUY on Beeyu for the following reasons:
- Beeyu came out with a public issue last year @Rs. 14 per share and the issue was over-subscribed 12 times.
- Beeyu has un-interrupted record for paying dividend since inception. Max. being 50% in 1998-99.
- Beeyu has a BV of Rs. 20
- Beeyu is the largest producer of tea in TN with biggest factory at one location to process 9000 TPA.
- Alliance Coffee is expected to have revenues in excess of Rs. 100 crores with marketing margins of 20-25%. Dividend income of Rs. 4 crores is expected as other income in Beeyu’s account. This should give a boost to Beeyu’s EPS.