Buy Jain Irrigation; target of Rs 195: A C Choksi

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Buy Jain Irrigation; target of Rs 195: A C Choksi

A C Choksi is bullish on Jain Irrigation Systems and has recommended buy rating on the stock with a target of Rs 195 in its August 16, 2011 research report.

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A C Choksi is bullish on Jain Irrigation Systems and has recommended buy rating on the stock with a target of Rs 195 in its August 16, 2011 research report.

"Jain Irrigation is one of India's leading manufacturers of Micro Irrigation Systems, Piping Systems, Plastic Sheets and Agro-Processed Products. Since the Company commenced operations in 1986, it has built an extensive distribution network throughout semi-urban and rural India, selling flagship brands such as Jain Pipe and Jain Drip, which are well known in the domestic markets. Jain Irrigation manufacture and supply Tissue Cultured Plants and Hybrid Seeds, Bio-fertilizers fortified with microbial cultures and soil fertility enhancers, Piping Systems for closed water conveyance, most cost effective yet very efficient Micro and Sprinkler Irrigation Systems as well as Green Houses and Shade Houses. Jain Irrigation undertake turnkey projects, both for small farm holders and large wasteland owners, offering soil and water survey and sampling, irrigation system planning, design and installation."

"The net sales for Q1FY12 grew by 29.30 % to Rs 951.31 crore. The domestic business grew by 30%. The Micro Irrigation System business has shown a growth of 31%, pipe business by 4% and agro processing by 80%. Within agro processing, onion dehydration grew by 24% and Mango pulp grew by 106% with strong seasonal demand. Export business has confirmed the revival sign of overseas demand and improving environment witnessed in the previous quarter. Overall exports for the company were up by 23%."

"Agro-business has proved to be a fruitful sector in the present global crisis, showing positive signs of development in the sector. Jain Irrigation reported FY 11 consolidated sales of Rs. 4072.45, representing YoY growth of 20 % against Rs. 3385.77 in FY 10, with the Operating Profit Margin of 22.2 %. Jain Irrigation reported a net profit of Rs. 288 crore for the year ended March 2011 as compared to 248 crore during the year ended March 2010, growth of 16 %. With reasonable monsoon across country, we expect higher demand due to improved focus on agriculture productivity which can mitigate food inflation."

"We have also seen improvement in subsidy receivable and as conveyed earlier we expect situation to improve considerably in current and next quarter. As today's markets are technology driven, new emerging technologies are coming in the agriculture sector and farmers are adopting them for better productivity at lower cost. Thus given a long term growth prospects of Jain Irrigation Systems Ltd (JISL), it is a suitable investment option for investors. We recommend a "BUY" call on the stock with the target price of Rs 195," says A C Choksi research report.

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To read the full report click on the attachment