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Friday, October 15, 2010

Jayant Agro Organics: Sept 2010 Shareholding Report and Bonus Chance


Jayant Agro Organics has also reported the shareholding for the quarter ending Sept 30,2010
These are some of the salient points:

- Total number of shareholders:  5,242 (June 2010: 5630)
- HNI shareholding per investor: 32,451 (June: 29,569)
- Small Individual shareholders: 4,709 (June: 5,140)
- Aditya Birla Money has entered into Jayant agro (Nil holding in June 2010): 504,022

CMP: 139.25
Market Cap: 209Cr

The great part is the possibility of bonus which was mentioned in their AGM and recorded in the minutes..


Conclusion: Jayant Agro Organics is a Value buy at these levels cause the company is destined to report higher top line and bottom line growth numbers for the next few years.. This is due to the fact that Jayant Agro is going to move from being a low value added Castor commodities player into a high value added castor derivatives player.. also with peak oil eminent Castor is a replacement product for crude in chemical feed stock.. Strong buy with multibagger opportunities as the company is right now selling at less than one times Quarterly sales.. and this could easily quote at one times sales..
Bonus mention is still not digested by the market.. Next Quarterly results are on Oct 22,2010 so this is as good an opportunity to buy as ever..

10 comments:

rajsmusings said...

Hi Prahalad,

Could the debt position be a source of problem for this company ?
I see their debt equity ratio is 2.1. any views on this ?

Regards
Raja

What'sUp Prahalad said...

Raja:

Good Catch..
As per March 2010 Annual Report

Standalone:
Long term debt: 4.4Cr
Short term Debt: 133.3Cr
Unsecured Loans: 27.5Cr
Inventories: 92.73Cr

Notes Mention that:
Short term loans are secured by joint deed of hypothecation, on pari passu basis of
- raw material,
- work- inprocess,
- finished goods,
- spares and receivables and
- personal guarantee of the Directors....
==============================
On a consolidated basis:
Long term Debt: 54.56Cr
Short term: 155.4Cr

Inventories:126Cr
==============================
So High Debt Equity is basically due to high levels of inventory stock.. and its all short term in nature (12 months or less..)

Even In GAEL I did see increase in Debt along with increase in Inventories..

I guess Its another 1 year of food inflation in the horizon.. atleast all the stocking up of inventories by GAEL and Jayant Agro.. point in that direction..
==============================
Guess all these companies are taking advantages.. of agri loans from banks to fund their inventories..
==============================
I think the news is still not out that Jayant is going to issue bonus shares..
though I did see a few news items with recommendation to invest in jayant by investment house
==============================
with just 5000 odd shareholders.. this stock has a long way to go considering the dominant position India has in Castor globally ..and Jayant is the largest player in India..

Earnings should double atleast from last year levels.. and margins should improve..

IF you have not yet invested in Jayant this is a good time to get in..

Pls Note: long term recommendation only as short term we have no idea what will happen..(Stock price can be manipulated..)

=happy investing
whatsup-indianstockideas.blogspot.com

Purushottam said...

I also see thay Anand Kamalnayan pandit has come into stock... if he is what described in below reuters site then it seems good..

http://in.reuters.com/finance/stocks/officerProfile?symbol=BMBK.BO&officerId=729768

Brief Biography : Mr. Anand Kamalnayan Pandit is Non-Executive Director of Bank of Maharashtra. He has experience of 20 years in industry and business. He was a nominee Director during 2001-04 and a shareholder Director during 2005-08 of the Bank. He is a Vice President of Investor Grievances Forum, Mumbai. He has Bachelor of Engineering degree and has done Real Estate Programme at Harvard Business School.

What'sUp Prahalad said...

Purushottam:

Yes I did try to find out more about Anand Kamalnayan pandit
but did not find more info other than the Bank of Maharashtra link..

Anand seems to be on board of other companies.. but Bank of Maharashtra is not one of the bankers of Jayant agro.. so cannot find the link.. I guess he is a Golf Buddy..

So I guess its just that Anand Pandit is an investor..

Yes such large agressive holdings means there is a possibility to make a lot of money in Jayant..

Atleast I feel it has a lot more steam left and Jayant will be a 1000Cr company .. It is the market leader and it has setup joint venture with Mitsui one of the oldest players in castor oil derivatives..

Long and Strong!!

=happy investing
whatsup-indianstockideas.blogspot.com

What'sUp Prahalad said...

Purushottam:

Yes I did try to find out more about Anand Kamalnayan pandit
but did not find more info other than the Bank of Maharashtra link..

Anand seems to be on board of other companies.. but Bank of Maharashtra is not one of the bankers of Jayant agro.. so cannot find the link.. I guess he is a Golf Buddy..

So I guess its just that Anand Pandit is an investor..

Yes such large agressive holdings means there is a possibility to make a lot of money in Jayant..

Atleast I feel it has a lot more steam left and Jayant will be a 1000Cr company .. It is the market leader and it has setup joint venture with Mitsui one of the oldest players in castor oil derivatives..

Long and Strong!!

=happy investing
whatsup-indianstockideas.blogspot.com

rajsmusings said...

Hi Prahalad,

Thanks for the lovely logical explanation.

Would you be interested to take a look at Vikas WSP - a guar gum company.

Here are few of the things that i couldn't put in perspective and would love to have your help.

1. On a sales/market cap basis vikas is having a ratio of close to 1. But when i see the PE, vikas is trading at around 3-4 PE.
Whereas in comparison Jayant is only 0.25 in Sales/market cap but the PE is close to 25.

So, which one does appear cheap to you ?

I do plan to get into Jayant in phased manner. Will start with buying a 30% of my allocation for the stock in few days.

Regards
Raja

What'sUp Prahalad said...

Raja:

Vikas WSP.. I have been observing the stock.. but a lot of negatives:
- Low promoter holding
- Inconsistent divident payout
- GAEL PBT: 90Cr Tax: 30Cr
- Vikas WSP PBT: 132.66Cr: Tax: 12.71Cr

looks like the profits are inflated.. and so they are being discounted..

===================
Also on a turnover of 459Cr Profit of 167Cr I think even Infosys would have been proud of such margins.. again a clear sign of inflated profits.. and doctored accounts..
===================
I guess Inconsistent Divident payout.. excess liquidity.. fudging of accounts.. low promoter shareholding..low tax payments .. all points to an avoid..

Ofcourse if you see promoter being proactive.. investor friendly.. posting their annual report with bse/nse..
we can expect some change..
====================
The thing is promoters have 100 ways to fleece the investors.. say they have an intermediate company which can increase the input cost..
completely cutting out investors invested in Vikas Stock..
The same can be done at the end product level..
====================
with 100% of Vikas WSP promoter shareholding pledged to lenders.. I think the stock is ready for a fall..
====================
I hope all this makes sense to you..

=happy investing
whatsup-indianstockideas.blogspot.com

rajsmusings said...

Thanks Prahalad,

The points you made surely make sense and i'll make them part of my checklist (things to look out for).

Also the point you made about the NPM of Vikas is very right. The margin seemed very fancy.

Got to learn a lot from you and the time spent reading your blog for past few months has been really worthwhile. Thanks again.

Regards
Raja

Purushottam said...

Prahalad:
High castor oil prices hurt manufacturers ..
Do you think the this news has any impact on this quarter and next quarter .. Below link has detailed news... Your view.

http://www.livemint.com/2010/09/23161634/High-castor-oil-prices-hurt-ma.html

What'sUp Prahalad said...

Purushottam:

Thanks for the link to the news item..

The fact is demand is more than supply.. Chemical composition of castor is such that it can allow chemical derivations that is not practical with other vegetable oils and hence castor oil is a valuable feedstock to chemical industry..

For any product where demand is higher than supply .. it will be easy to raise product prices..

There is always a possibility the margins will drop .. but it will be temporary in nature and margins should bounce back..

Since Jayant is going to move into higher value added products I do expect Jayant to have better results/margins this year as compared to last year..

=happy investing
whatsup-indianstockideas.blogspot[dot]com