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Friday, May 21, 2010

Jayant Agro Organics: Shareholding and Insider trading

Jayant Agro Organics is the next Best Buy recommendation.
CMP: 80.90, Market Cap: 121Cr, Free Float: 54Cr (44.60%)

Let us look at the latest shareholding figure for Jayant Agro Organics.

1. Promoters hold 59.93% of the equity
2. 295 Corporate bodies own 11.78% of the equity.
3. 5695 Individual shareholders (holding less than 20,000 shares) own 18.15% of the equity.
4. 19 High net worth individual shareholders (holding more than 20,000 shares) own 5.87% of the equity.
5. Total number of shareholders are just 6096 (including promoters)
6. There are 4 corporates who hold 12.13% of the shareholding. Invest India securities private limited holds 4.99% of shares.
7. Itoh Oil Chemicals Co Ltd holds 4% of shares of Jayant Agro Organics.

there are only 5695 Individual shareholders and that's the stock we are trying to buy/sell as promoters and corporates are all long term players. 5695 shareholders own 2,722,599 shares (18.15%) ie on average 478 shares are held by an individual investor.

We can see that 4 corporates hold 12.13% shares (Public holding more than 1% of the shares) while the bodies corporate holding is 11.78% (point 2) so most likely individual shareholding is still lower.

Also the free floating stock which is reported as 44.60% is actually 18.15% ie 21.96Cr. Cause rest of the stock is in strong hands and most likely not going to be available in the market for buy/sell.

Let us also look at another chart for Jayant Agro:

As can be seen promoters have been increasing their shareholding and public/individual investors are being crowded out. Corporate holding are somewhat steady.

Jayant Agro Oragnics is right now also very close to its 200 Day Moving Average so attractively priced.
Lets dig a little deeper into the corporate shareholding.
Itoh Oil Chemical Company which is holding 4% stake was issued shares at a price of Rs 105 per share in 2007. Itoh Oil Company is a world leader in castor oil derivatives and started manufacturing castor oil derivatives in 1946. Check out company website link

Invest India Securities private limited was issued warrants as special investors in jan 2007 along with promoters at a price of 65/= so needless to say they will also be linked to promoters in some way or the other.
It has been stated before that the promoters have increased shareholding in Jayant Agro Organics by 4.99% which is the maximum that the promoters can buy from the market in a year as part of creeping acquisition.
Lets look at the acquisitons reported to the SEBI and stock exchanges.
1. April 22, 2009 : Jayant Finvest Limited Acquired 3,25,094 shares between Nov 26,2008 to April 22,2009 ( Acquired in 24 different transactions)
2. August 28,2009: Jayant Finvest Limited Acquired 3,02,266 shares between April 23,2009 to August 24,2009 (Acquired in 30 seperate transactions)
3. Jan 1, 2010: Jayant Finvest Limited Acquired 3,17,737 shares between August 25,2009 to Jan 4,2010 (Acquired in 72 different dates)
So in

Conclusion: Actual liquidity in Jayant Agro Organics shares which is basically the free float and published as 54Cr (44.6% of Current Market Cap: 121Cr) is not really free float as large individual investors are long term investors and will hold the stock long term. Actual free float is around 18.15% small individual investor holding (21.96Cr). As can be seen from the chart above Jayant Agro Organics Stock has outperformed the index and rightly so as promoters are increasing shareholding in the company reducing liquidity in the market.

Jayant Agro Organics is now the largest player in India in Castor business. India is the largest castor oil producer in the world. Jayant Agro Organics right now is destined to be the largest Castor Oil derivatives player in the world and with complete backward integration from farming to high end derivatives. We can safely assume Jayant Agro Organics is going to be the Reliance Industries of Castor Oil. Companies valuation right now is Very Very Very Cheap. I would conclude Jayant Agro Organics is a better bet than even Gujarat Ambuja Exports .. though on paper (numbers..) Gujarat Ambuja Exports is too good to be true and beats Jayant Agro Organics hands down.

So here we have it..Jayant Agro Organics and Gujarat Ambuja Exports are 2 "Fire and Forget" missiles of investment for the future.. you can expect them to be multibaggers in 2-3 years times. On a shorter 12 months time frame we can expect both stocks to easily double from current levels. They are both agro based derivatives manufacturers and Jayant Agro Organics  products Castor oil can substitute petroleum products

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