The expectations of a liberal bonus has been triggered based on the analysis of the balance sheet which reveals that the company has huge reserves which could be shared with the investors during the end of the millenium. Besides this, according to market sources, the company has a huge `rose-wood' forest which if valued could target a price of nearly Rs 900 crore.

This, according to Calcutta-based brokers, had triggered off the buying at around Rs 370 levels. ``The valuation of the rose-wood forest has not yet reflected in the balance sheet of the company. However even under the given conditions where Tea exports are picking up considerably we can expect the company to at least reward its investors with a bonus of 2:5shares,'' explained a senior research analyst with an FII brokerage house.

Besides, Tata Tea's profitability margins are expected to get a major boost from the hardeneing of tea prices and a surge in exports. Traditionally, tea prices are higher in the last quarter of a financial year as the production tapers off. Prices generally tend to peak in February-March, which augurs well for tea companies.

The company's third quarter (ended December 1998) performace was dissappointing on account of a slight weakening of tea prices due to a bumper crop in the north. However, analysts expect that the company would come back strongly to report a much better performance in the fourth quarter.

The full year net profit is expected to be in the region of Rs 155-165 crore, thereby showing an improvement of almost 60 per cent over last years figure of Rs 102.16 crore. Turnover is expected to be around Rs 230-235 crore thereby taking the full year turnover to Rs 875 crore, which is close to last years figure of Rs 878crore. A few analysts even expect the turnover to top Rs 900-crore mark and thus report a higher net of around Rs 170 crore.

Although the company has not been liberal when it comes to bonus issues, the market expects that this year the company would announce a bonus. The company's last bonus was way back in 1994 in the ratio of one share for every three shares held. Tata Tea is sitting comfortable with a low equity base of Rs 48.62 crore and high reserves of over Rs 330 crore, which yield a high book value of close to Rs 80. The company over the years has followed a very liberal dividend distribution policy and the dividend last year peaked at 101 per cent after 55 per cent and 65 per cent in the preceeding two years.

Market too has responded well to the expectattions of a bonus and the scrip has firmed up from Rs 345 on April 26 to a high of Rs 502 before settling at the current level of Rs 485 on the Bombay Stock Exchange (BSE). Trading volumes have increased from an average daily volume of around 6-7lakh shares to around 12-13 lakh shares a day on the BSE.

In the current fiscal, Tata Tea's financial performance showed a marked improvement in the first three quarters and especially the second quarter ended September 1998 on account of firm tea prices and resumption of exports to Russia. The company's profitability margins soared to 38 per ecnt from 27 per cent in the corresponding quarter of 1997-98. As a result, the net profit improved to Rs 55.32 crore for the quarter ended September 1998 from 42.49 crore in the corresponding quarter of 1997-98.

The net profit performance in the second quarter was substantially higher than the first quarter net profit figure of Rs 39.1 crore.