PKTEA - Peria Kara. Tea

📊 NSE: PKTEA 🏢 Tea 📅 Last Updated: 12/14/2025 10:58

💰 Financial Performance

Revenue Growth by Segment

Total revenue for H1 FY26 was INR 27.42 Cr, a decline of 3.17% from INR 28.32 Cr in H1 FY25. Segment-wise: Tea revenue grew 0.31% to INR 19.07 Cr; Investment income declined 12.98% to INR 7.65 Cr; Power generation revenue dropped 29.35% to INR 0.92 Cr.

Geographic Revenue Split

Not disclosed in available documents, though operations are centered in four tea estates in Tamil Nadu.

Profitability Margins

Net Profit before Tax for H1 FY26 stood at INR 2.71 Cr, a significant decline of 62.26% from INR 7.17 Cr in H1 FY25. The decline was driven by a 60.11% drop in interest coverage ratio (from 5.59 to 2.23) due to lower asset sale profits and reduced interest income from loans.

EBITDA Margin

Operating margins in the tea segment have historically been low, recorded at 1.3% in FY19 compared to 5.2% in FY18. For H1 FY26, the Tea segment reported a loss of INR 2.99 Cr, widening from a loss of INR 1.44 Cr in H1 FY25.

Capital Expenditure

Purchase of Property, Plant & Equipment in H1 FY26 was INR 2.15 Cr, a massive increase from INR 0.008 Cr in H1 FY25. Capital Work in Progress stood at INR 3.26 Cr as of September 30, 2025.

Credit Rating & Borrowing

The company holds an [ICRA]BB+ (Stable) rating. Borrowing costs are reflected in finance costs of INR 2.05 Cr for H1 FY26, up 99% from INR 1.03 Cr in H1 FY25. Working capital utilization is high at approximately 92%.

⚙️ Operational Drivers

Raw Materials

Green tea leaves (from own estates and bought leaf), fertilizers, and fuel for processing. Specific % of total cost for each is not disclosed.

Import Sources

Sourced locally from four tea estates located in Tamil Nadu, India.

Capacity Expansion

Total tea production in FY25 was 25.58 lakh kgs, a 9.16% decline from 28.16 lakh kgs in FY24. No specific capacity expansion figures in MT/MW were provided for the future.

Raw Material Costs

Cost of materials consumed in H1 FY26 was INR 1.26 Cr, up 21.6% from INR 1.03 Cr in H1 FY25, despite lower production volumes.

Manufacturing Efficiency

Tea production efficiency was impacted by a dry spell, leading to a 9.16% YoY volume decline. Employee count stands at 1,042 to manage manual plucking and processing.

📈 Strategic Growth

Growth Strategy

The company is focusing on the production of high-quality Orthodox tea, which offers more attractive and stable pricing than CTC tea. It is also leveraging its large investment portfolio (INR 229.76 Cr in segment assets) to generate non-operational income.

Products & Services

Orthodox tea, wind power generation, and financial investment services.

Brand Portfolio

The Peria Karamalai Tea.

New Products/Services

Continued focus on Orthodox tea diversification; expected revenue contribution from tea and other crops is currently 84.11%.

🌍 External Factors

Industry Trends

The tea industry is shifting toward Orthodox varieties due to better export demand and stable pricing. The industry is currently facing challenges from volatile climate patterns and rising labor costs.

Competitive Landscape

Competes with other Indian tea producers in the South Indian market; characterized by low operating margins (1.3% - 5.2%).

Competitive Moat

Moat is based on established land holdings (four estates) and a long-standing brand since 1913. However, this is weakened by the commodity nature of tea and high sensitivity to weather.

Macro Economic Sensitivity

Highly sensitive to agricultural inflation and labor wage laws in Tamil Nadu.

Consumer Behavior

Shift toward high-quality, specialty teas (Orthodox) which the company is targeting.

⚖️ Regulatory & Governance

Industry Regulations

Subject to the Tea Board of India regulations and environmental norms for plantations and power generation.

Legal Contingencies

A scheme of arrangement involving group company Placid Limited (in which PKTEA holds 17.43% stake) is currently pending before the NCLT, Kolkata.

⚠️ Risk Analysis

Key Uncertainties

Agro-climatic risks (rainfall dependency) and volatility in tea prices could impact profitability by over 50% as seen in the H1 FY26 profit drop.

Geographic Concentration Risk

100% of tea production is concentrated in Tamil Nadu, making the company highly vulnerable to regional weather patterns.

Third Party Dependencies

Significant inter-corporate dependency, with approved loan limits of INR 300 Cr to promoter group companies like Kiran Vyapar Ltd (INR 100 Cr) and LNB Renewable Energy (INR 50 Cr).