McLeod Russel- IDBI Capital.

McLeod Russell India Ltd. (MRIL), the largest tea producer in the country has been formed by
demerger of bulk tea division of Eveready Industries India Ltd. Being it the largest player, the company
will get immensely benefited by the expected up move in the tea prices. It has 52 tea gardens with
aggregate area of more than 18,805 hectares located in Assam and Dooars producing around 74m
Kg of tea on consolidated basis. The company is open for further acquisition across the globe in
order to become a global player.

Going forward, we expect the PAT to increase more than 5 folds over next two fiscals induced by
top line CAGR of 17% over FY06 through FY08. The current market price is 5.3x the FY08E EPS of
Rs.17.4. Assuming a conservative P/E, we expect MRIL to trade at 7x its FY08E EPS. We recommend
‘Buy’ with the target price of Rs.120, which is 10% discount to our DCF valuation.