McLeod Russel India (MRIL) reported a disappointing set of Q1FY17 numbers on all fronts. Net sales grew 2.8% YoY to | 171.3 crore (Idirect estimate: | 179.2 crore). There was a marginal YoY recovery in tea volumes to 10 million kg (mkg) in Q1FY17 from 9.8 mkg in Q1FY16. Selling price remained flattish at | 171/kg for the quarter • The company posted a loss of | 15.6 crore at the EBITDA level primarily due to an increase in tea workers’ wages (employee cost up 16.7% YoY) in the absence of concomitant increase in tea prices. This, along with 26% YoY increase in interest cost to | 23.6 crore led to net loss of | 17.3 crore (I-direct estimate: | 20.2 crore profit). ICICI Securities Limited value the company at 12x FY18E EPS of | 13.4 and arrive at a target price of | 166/share with a HOLD recommendation.