Stock: Jayant Agro: Back Up The Truck!!

Jayant Agro Organics was on lower circuit on Friday the stock was down 19.9% and stock closed the day at 87.80 on NSE. The 200 Day Exponential Moving Average "EMA(200)" stands at 117.10 thats 33.37% higher than current market price..

Is this a time to Buy or wait for a further correction? That's a tricky question cause markets always have a way of proving us wrong. Catching the unsuspecting investor on the wrong foot.

I would buy based on the facts that:

- Jayant Agro is entering into higher value added castor derivatives (Sebacic Acid).. Plant has commenced operations this year as trial runs have been completed.

- Jayant Agro has in 6 months reported profits (13.08Cr) more than profits of last 12 months (Year ending March 2010 12.63Cr)

- Jayant Agro Management has also been upbeat about its future and increased shareholding in the company.

- Jayant Agro Management has eliminated preferential capital and issued equity shares in return to promoters and other investors (indicating that going forward equity shares will outpace the returns on the preferential capital)

- With 6 months consolidated sales at 580Cr full year Sales are expected to exceed 1000Cr

- In the past 2 year Sept 2008 to Sept 2010 almost 10.75 lakh shares have moved from weak hands (small individual investors) into the hands of high networth individuals and promoters.

As can be seen..

1. Small individual investors have reduced from 6087 to 4709 and holdings have reduced by 10.75lakh shares (Small investors are investors holding less than 20,000 shares)

2. HNI (High Networth Individuals) have increased from 24 to 48 and they have increased their shareholding by 4.20 lakh shares

3. Promoters have increased their shareholding by 9.75 lakh shares 6.5%

4. There has been a reduction is shareholding by corporate bodies by 2.99 lakh shares.

All in all no of investors have reduced from 6550 to 5242 and shares have changed hands to high networth individuals.. and promoters. 

Jayant Agro closest competitor is a company called "Bitor" formerly known as "Jayant Oil" Bitor is a private company which was the largest exporter of castor meal from India till 2004 SEA(Solvent Extractor Association of India) from 2005 onwards Jayant Agro has been receiving the award of "Highest Exporter of Castor Meal" from SEA

Here is a great article about castor which appeared in Business Standard 2008 and BITOR (Jayant Oil)(Link)

First Call Research has given a buy call on Jayant agro with research report (Link) In Page 10 of the report ..the estimated Net profits for march 2011 is 132 million (13.2Cr) which has been achieved in 6 months itself..

Jayant Agro management recently started better reporting of data such as
- consolidated results on a quarterly basis
- publishing of audited reports for subsidiary companies (Link)

Conclusion: Jayant Agro has been consolidating its position in castor. It is the largest processor of castor seeds from 2005 till date and is now entering into higher margin castor derivatives space. Promoters have been increasing their stake in Jayant Agro and even HNI have been consolidating their position. India has inherent strengths in castor as the largest producer and exporter of castor in the world. 
Jayant has been performing exceptionally well and is on its way to report 100% increase in net profits over march 2010 .. The current steep fall in prices is an opportunity to increase holding in Jayant Agro at prices 33.39% below its 200day EMA .. 


PN: These are my views about Jayant Agro based on publicly available information.. Please do your own deep dive before investing.  Personally I would take this opportunity to "Back up the Truck" and enjoy the opportunity the Market has offered..

=happy investing
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