Motilal Oswal's report on Jain Irrigation Systems
"Jain (JI) reported overall revenue of INR12.7b (est. INR13.3b), as against INR12.1b in 2QFY14, marking a YoY growth of 4.4%. EBITDA stood at INR1.6b (est. INR1.7b) in 2QFY15, with EBITDA margin at 12.4% YoY (est. 12.8%). Interest costs were flat YoY and stood at INR1.1b in 2QFY15, as against INR1.1b in 2QFY14. Forex loss for the quarter stood at INR254m due to MTM impact of INR depreciation on forex loans. PAT for the quarter stood at INR(-235m) (est. INR8m), against INR(-807m) in 2QFY14, impacted by forex loss."
"We expect strong free cash generation over FY14-17E led by domestic MIS business, which should aid to reduce the debt-equity from 1.8x in FY14 to 1x in FY17E. We cut the earnings estimates for FY15E and FY16E by 28% and 15% respectively to reflect the sharp de-growth in PE pipes and MIS exports. We maintain Buy, with a revised target price of INR120 (16x FY16E EPS of INR7.5)", says Motilal Oswal research report.
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