Buy Jain Irrigation;target of Rs 100: Edelweiss

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Edelweiss's research report on Jain IrrigationJain Irrigation (JISL) reported below estimate Q3FY16 standalone numbers, primarily on account of lower food processing revenues and higher interest costs. Key positives were: 1) domestic and export sales grew 2.3% and 11.3 YoY, respectively; 2) all businesses grew well, except food processing; 3) MIS revenues rose 6.5% YoY; 4) pipe business grew 12.8% led by 23.8% growth in PE Pipe division; 5) total order book moved up 37% QoQ to 18.4bn. Key negatives were: 1) food division grew by mere 1.6% led by 15.4% dip in fruit processing segment; 2) net debt jumped INR1.13bn QoQ (up INR0.91bn YoY); and 3) MIS project business declined 21.7% YoY. JISL was successful in raising INR7.9bn via equity in parent and stake sale in food processing business (refer our note, Jain Irrigation: Fund raising to deleverage balance sheet). The company proposes to use the funds to prune debt which will result in interest saving of INR0.8bn in FY17. In view of the immense untapped opportunity, sharpened government focus on MIS and JISL’s market leadership, we anticipate its MIS business to sustain robust growth. Maintain ‘BUY’ with TP of INR100. Going ahead, we anticipate better operational performance and lower interest costs to drive PAT growth. We have trimmed FY17/18E EBITDA estimates 7/12% considering lower revenue growth. Rolling over valuations to FY18E, we maintain ‘BUY’ with target price of INR100 (15x FY18E, earlier 15x FY17E). At current levels, the stock is trading at 31.4x FY16E and 13.7x FY17E EPS.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More