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Tuesday, October 12, 2010

Jayant Agro: Multibagger already recommended as a Best Buy

Jayant Agro was recommended as an investment in May 15,2010 at a price of 81.55.
Current Market Price of Jayant Agro is: 146.70
Jayant in a period of 5 months has given us a return of 80%.

The question in our mind is:
- Is Jayant Agro worth buying at these levels (is it cheap?)
- What is the fair value for Jayant agro Organics.

CMP: 143.70
Market Cap: 215 Cr
Reserves: 71.36Cr
Debt: 165.35Cr
Sales: 886.14Cr [Consolidated March 2010]
Profit Before Depreciation Interest and Tax: 41.04Cr (Consolidated)
Net Profit: 12.63Cr

Enterprise Value: 216.08 + 165.35 - 11.38Cr = 370.05Cr

The stock looks fairly priced.. but we must watch what the management has done.
- Reduced preferential capital worth 3Cr with 7% interest and replaced with additional equity (which basically means promoters expect equity  a.k.a stock price to outperform)
- Value added products are being manufactured in 75% subsidiary company with 25% stake by Mitsui.
- Promoters have increased their shareholding by 4.99% in 2009 and additional 2% in 2010 by buying shares from the open market
- Positive media coverage.. management interview in media with forward looking statement of 35% growth for next 2 years.. (Link)
- Positive news flow that Jayant has been awarded with Highest Exporter of Castor seed Extraction for the year 2009-2010 (sept 24,2010)

If one looks at the recent quaterly statement Jayant Agro had
Sales Q1 June 2010: 290.74Cr (Consolidated)
PBDIT: 16.05Cr
Net Profit: 6.04Cr
Year Ending March 2010 (Audited Consolidated):
Sales : 904.55Cr
PBDIT: 41.32Cr
Net Profit: 12.46Cr
In 1 Quarter Jayant has already earned 48.47% of last years earnings.
Extrapolating the earnings of Jayant for Q1 we can expect jayant to have sales over 1200Cr and Net profit of 24Cr which on an equity base of 7.5Cr works out to be

Sales: 1200Cr
Net Profit: 24Cr
EPS: Rs 16
Current Market Cap: 215Cr
Sept 2010 Quaterly results are scheduled to be announced on Oct 22,2010 (so now is the time to Buy.. before the results..)

Conclusion: Jayant is one of the "Best Buy" recommendations we can expect Jayant stock price to grow at least 100% from these levels ie CMP: 143.7 Target Price: 288 Time period: 12-18 months. Personally considering that Jayant is the largest player in India and India exports 90% of all castor in the world and is the largest producer in the world  (pls check old blogs link) I expect Jayant to get a premium and have a market cap close to 1200Cr which is 5.58 times current market capitalisation.. time period would be 24 months to 36 months.


Anonymous said...

CMP is down to 111 from your recommendation at 147.

Is this because of changed fundamentals or you still think this is a great buy?


What'sUp Prahalad said...

Rupesh Bhai:

Jayant agro is falling because I was trying to buy.. I have been buying from 140 levels all the way down to 87..
MM was selling and in the past 2 months close to 1.7Cr worth of shares have been sold into the market.. (to bring the prices down..)
Fundamentals have only improved.. there is no need to worry as far as fundamentals are concerned..

Jayant should report 25Cr net (March 2011) profit a 100% rise over last years 12Cr (March 2010) net profit.. Current market cap of 166 is atleast at a 50% discount (general valuation is 10 times net profit)

You can buy with your eye's closed as the stock price will not remain at 110 levels for long I expect Jayant to give 50% return in 1 Quarter (3 - 6 months)

=happy investing

What'sUp Prahalad said...


That is a spam from mr Arun the Stock guru?..

Wow spamming to get hits.. I really dont know how this whole thing works..

Gulp!! I did click the link a few times.. so maybe it works..

=happy investing