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Wednesday, October 20, 2010

Jayant Agro news in Hindu: Oct 20,2010

Article in Hindu about Jayant Agro today Oct 20,2010:

The Vadodra-based Jayant Agro Organics, an oleo chemical manufacturing company, will commence commercial production of Sebacic Acid, a complex value-added castor oil-based derivative at Ihsedu Speciality Chemicals, a joint venture with Mitsui & Co.

Ihsedu Speciality Chemicals, in which Jayant Agro holds 76 per cent equity, will have a capacity to produce 8,000 tonnes a year of sebacic acid and add a turnover of Rs 200 crore, the company said.

Sebacic acid, which is a high margin and value-added specialty chemical, finds application in special grade of nylons, engineering plastics, automobiles coolants etc.

Jayant Agro Organics' wholly-owned subsidiary Ihsedu Agrochem will start co-generation plant based on its by-product de-oiled cake resulting in substantial cost saving, it said. The company also plans to apply for carbon credit as it will be using an eco-friendly fuel. On Tuesday, Jayant Agro shares on the BSE rose one per cent to Rs 140.

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Anonymous said...


wat'z ur view on buying Financial Technologies at current price?

What'sUp Prahalad said...

Anonymous ji:

It is a good stock unfortunately I like to buy stuff cheap.. and Financial Technologies is not cheap..

=happy investing

rajsmusings said...

Hi Prahalad,

I have been reading a little about Jayant Agro and few questions comes to mind. It's wonderful to have you here to clarify the doubts and learn from your experience. So, here goes the questions.

1. Roughly 83% of it's profit comes from Castor oil derivatives and i think they are mostly export driven. So, how do you think will the currency fluctuation affect them ? Do they have the pricing power to tide over ruppe appreciation to some extent ? Considering that their OPM is so thin at roughly 3%.

2. I have been worried about their PE after seeing their data from rediff site, it shows the current PE as 26. but after seeing their annual report am more comfortable as it comes to rougly 15. I guess its because of the rediff showing only stand alone result. Is that right ?


What'sUp Prahalad said...


Currency Fluctuations:-
Every Exporter faces the same problem.. Its like a Sales man saying he does not like the fact that the job requires "Travel"

So every Exporter will face currency fluctuations.. and Jayant will deal with it the same way as every one else does..

PE Ratio and Earnings:-
Yes most sites will only display Standalone numbers.. and Jayant agro will have most of its earnings in consolidated numbers so what you say is true.. on a consolidated basis Jayant is not that expensive..

The real point that we should keep in mind is:
- India is the largest player in the world for castor
- India also has highest yields for castor.
- Castor is a hardy plant (does not require much care... unlike Rice and other food grains)
- Jayant is the largest player in India and integrated from seeds to derivatives..
- Castor demand is restricted by Supply side.. the demand for castor is unlimited.. due to its unique properties..
- Since it has a joint venture with Mitsui it will have access to technology as well as market..
- Jayant just has to maintain an efficient operations and rest is already in place..

Company has taken certain steps which indicate the stock price is set for higher levels..
- eliminated preferential capital
- issued fresh capital to promoters
- creeping acquisitions by promoters
- Reporting Quaterly consolidated numbers

I think we have a winner in hand.. and as soon as the market can see the value equation there is going to be a stampede at the enterance of Jayant Agro..

I would suggest accumulation with initial invest right away.. so that atleast you have the foot in the door..

=happy investing