Edelweiss is bullish on Jain Irrigation has recommended buy rating on the stock with a target price of Rs 137 in its research report dated August 16, 2017
Edelweiss' research report on Jain Irrigation
Jain Irrigation (JISL) reported muted Q1FY18 numbers with revenue growing only 1% YoY to INR 16.8bn as all segments reported flat growth or declined impacted by GST-related destocking and deferment. While standalone hi-tech agri revenue grew only 4% YoY to INR4.7bn, consolidated plastic division declined 5% YoY and agro processing declined 12% YoY on lower pick up by major customers like Coke India. EBITDA margin was flat at 14%. On the debt front, excluding the US acquisition (INR3.2bn), net debt fell by INR0.7bn YoY. While management has maintained guidance, we prune FY18 EBITDA growth estimate to 20% (JISL’s guidance: 25% YoY growth) and revise FY18/19E EPS down 9/4% to factor in challenges in H1FY18 due to GST in all of the company’s major segments. Maintain ‘BUY’ with revised TP of INR137 (INR142 earlier).
While management has maintained its guidance despite muted Q1FY18 performance, we have lowered our FY18E EBITDA growth to 20% and revised FY18/19E EPS down 9/4% to factor in challenges in H1FY18 due to GST in all of the company’s major segments. We value JISL based on 15x FY19E EPS, yielding revised target price of INR137 (INR142 earlier). We maintain ‘BUY’.
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