Company: Jayant Agro Organics: Dec 2010 Results Review.

Jayant Agro Organics CMP: 104.55 Market Cap: 156.82Cr

 Debt: 297.6Cr (Consolidated as of Sept 2010)

Jayant as we are all aware has recently commissioned a subsidiary company Ihsedu Speciality Chemicals Pvt. Ltd. manufacturing castor oil 2nd generation derivative Sebacic Acid. Keeping this in mind we shall first review the consolidated numbers for Jayant Agro.

1. On a Year-On-Year (Y-O-Y) basis we have 33% increase in top line and 69.5% increase in Bottom line (Net Profit) [Results are for 9 months ending Dec 2010 against Dec 2009] So on a yearly basis Jayant Agro Organics is doing pretty well..

Jayant Agro has not published Quaterly consolidated numbers but we do have 3,6 and 9 months consolidated numbers.

2. The consolidated PBDIT margin for:
9 month ending Dec 2010 is 6.13%
6 month ending Sept 2010 is 5.80%
3 Month ending June 2010 is 5.47%

This clearly means that there is a substantial growth in consolidated operating margins with each quarterly results .. because the 9 month margin is an avg for sales of 9 months.. but within 3 months the margins have expanded significantly (5.80% to 6.13%)  to increase the avg for the last 6 months by (6.13-5.8 = 0.33%)

So in the last quarter consolidated margin is higher by 6.13+0.33+0.33 = 6.79% which means the margins have expanded by a full 1% in the last quarter to raise the avg margin up to 6.13%

3. Interest payment has also been rising and as % of sales has been rising steadily with each passing quarter.
This I believe something we need to keep track off.. cause it could derail the Jayant Agro story.

Standalone numbers:

1. Standalone numbers are also pretty decent with increasing margins..
2. In addition to increasing margins we can see that the higher margin Derivatives business has been increasing   revenue share while the lower margin castor oil business % revenues share is decreasing.
3. Interest as a percentage of sales in increasing .. which is the most important parameter to keep under constant watch.

We do have CRISIL ratings for Jayant Agro and Ihsedu Specialty Chemicals Pvt limited. which are reported to be stable.
Ihsedu Specialty Chemicals Pvt limited Credit rating:

Jayant Agro Credit rating:

Jayant agro Organics with its Sebacic Acid Castor derivatives plant in place is set to report higher margins. Please note that the Sebacic Acid plant is not yet at full commercial production.. which basically means that the plant is producing Sebacic Acid but it is more of an ad-hoc manner and profits are reported based on the sale of trial batches.. commercial production as of Sept 2010 had not yet started..

Conclusion: Jayant agro Engine is rolling and we can see the profits increase as expected. We should be keeping a close watch on interest payments which is the only negative. Sebacic Acid plant commercial production has not yet started so we can expect the revenues to grow.. for the next year also.. with higher percentage of derivatives sale. HOLD on to your Cheap Stocks.. and If you have not yet bought any shares.. then this is a very good opportunity.