Jayant Agro Organics: Dec 2011 Results

Jayant Agro Organics has reported its Q3 December 2011 results.. Jayant has 4 subsidiary companies..
- Ihsedu Agrochem Pvt. Ltd.
- Ihsedu Speciality Chemicals Pvt. Ltd.
- Ihsedu Coreagri Services Pvt. Ltd.
- Ihsedu Itoh Green Chemicals Marketing Pvt. Ltd.

Ihsedu Agrochem Pvt Ltd is a non listed materially significant subsidiary of Jayant Agro Organics. Ihsedu networth and sales make up more than 20% of Jayant Agro Organics consolidated networth and net sales..

Similarly Ihsedu Speciality Chemicals Pvt Ltd is a non listed materially significant subsidiary of Jayant Agro Organics as Ihsedu Speciality Chemicals Pvt limited "networth" is more than 20% of consolidated networth of Jayant Agro Organics.

For year ending March 2011.
Standalone profits for Jayant Agro was: 17.21Cr
Consoldiated profits for Jayant agro was: 24.57Cr

Considering the facts that Jayant has 2 subsidiaries which are materially significant its always adviseable to look at the consoldiated numbers.. So lets look at the latest consoldiated numbers..

1. On a Year-on-Year basis the numbers are great..

Sales up: +62.85%
PBDIT up: 34.15%
Taxes up: 38.54%
Net Profit up: 23.60%

- Volume driven performance..
- Costs have increased decreasing margins
- Taxes paid at 32% of PBT is good.

These numbers are great ..specially if you consider the fact that March 2011 (24.57cr) net profits were 97.14% higher than March 2010 (12.46cr) net profits.So this increase is over a higher base..

Jayant Agro Organics with a profit of 25.11cr has exceeded last year's profits within 9 months of this financial year.

Sales are doing great lets look at the margins..

1. Margins on a Year-on-Year basis is down  108 basis points (ie. 1.08%) from 6.13% to 5.05%
most likely we might see margins drop to 2010 levels of 4.56% (unless the new derivatives business really increases the profit margins)
 2. Depreciation as a percentage of sales is down.. while on absolute numbers it is still increasing..
3. Interest payments at 2% of sales is right on the dot to take advantage of the 2% interest subsidy scheme of govt of india for exporters. (so expect higher debt levels ..)


Strong topline growth .. is an indication of Jayant's growing position within the castor oil and derivatives business. Margins are stable at 5-6% PBDIT.. with the castor derivatives plant in place .. we should see higher margins..(Watch out for that)

Segmented results is not for the consolidated entity.. hence does not make sense to compare them.

Conclusion: Jayant Agro Organics is growing consistently.. profits are still very low with 2% net profit margins.. Derivatives plant's first full quarter of operations is going to be Jan-March 2012 and something to watch out for  improvement in margins.. Pls note as per management derivatives will add around 200-250cr (annually) to the topline so donot expect sharp increase in topline based on new castor derivatives business. I would continue to hold Jayant stock for now due to improving business climate (peak oil, bio-renewables demand)