Terai Tea Co Reports Strong Q2 FY24-25 Growth Amid Long-Term Challenges

Terai Tea Co, a microcap player in the Tea/Coffee industry, has recently undergone an evaluation adjustment reflecting its current financial standing. The company reported very positive financial performance for the second quarter of FY24-25, showcasing significant growth in net profit and net sales. Specifically, net sales for the half-year reached Rs 49.46 crore, marking a growth of 125.33%, while the profit after tax for the quarter stood at Rs 9.05 crore, reflecting an impressive increase of 339.3%.
Despite these positive indicators, the company faces challenges in its long-term fundamental strength, evidenced by a compound annual growth rate (CAGR) of 6.68% in net sales over the past five years. Additionally, the company's ability to service its debt is under scrutiny, highlighted by a negative EBIT to interest ratio of -2.37 and reported losses leading to negative return on capital employed (ROCE).

The stock's performance has been notable, generating a return of 90.95% over the past year, significantly outpacing the broader market. However, it is trading at a level considered risky compared to its historical valuations.

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