Jayant Agro: Castor Crop Survey-SEA & Jayant estimated earnings Year 2011-12

Looks like there has been a huge increase in cultivation of Castor in India. As per Solvent Extractors Association (SEA) of India.

=   Total area under Castor crop in India for the year 2011-12 is 11.50 lakh hectares. It has increased by 34% as compared to previous year.

=    Estimated total production of Castor Seeds in India for the year 2011-12 is 16.19 lakh tonnes.  It has increased by 30% as compared to previous year.

=    Average yield for the year 2011-12 is 1417 kg/hectare as against 1453 kg/hectare during the year 2010-11.  It has decreased by 3% as compared to previous year.

Export numbers have also increased by 60% .. so we can expect Jayant also to report higher earnings for the year ended March 31,2012.

Jayant has reported for 9 months ended dec2011.(Year on Year)Sales increase: 62%  PBDIT Profit margin of 5.05%Net Profit margin of 1.83%

Assuming Jayant Agro maintains the same profit margins as reported for 9 months ended Dec 2011we can expect Jayant Agro Expected year ending March 2012:-Sales:1,875.20crPBDIT: 94.69crNet Profit: 34.31cr EPS: 22.87

Please Note for year ending March 2011 Profit margins were

PBDIT : 5.41%

Net Profit: 2.10%

Assuming Jayant maintains the same margin as march 2011..(higher than margins for 9 months ended dec 2011) these margins would result in :- 

- PBDIT:  101.44cr

- Net Profit: 39.37cr

- EPS: 26.25

Now we all know that Sebacic acid derivatives plant has started production from dec 2011 so we can expect margins to improve for 3 months data..

My guess estimate for Year ending March 2012 Net Profit numbers:

Poor Result would be below 31Cr EPS: 20.66

Fair result would be: 34.31cr EPS: 22.87

Great result would be: 39cr,  EPS: 26 or above

A     whatever the result .. we can expect the dividend payout to increase based on historical figures..  

        dividend payout as percentage of net profit (Including dividend tax):

          March 2011: 13.40%

          March 2010: 23.33%

          March 2009: 36.18%

          March 2008: 25.65%

   

          So even assuming 5 yrs avg of 19.71% and assuming worst case result of 31Cr Net Profit: Dividend payout will be rs 4.07 per share assuming 34-39cr as net profit dividend payout could be: 4.46 - 5.12 assuming 13.4% for net profit of 31cr we can expect dividend of 2.76 (Poor payout) 

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           Conclusion: Jayant is a strong value buy! For year ending March 2012 we can expect Jayant Agro to report:

            Topline of 1875cr 

            Net Profit from 30cr to 39cr, 

            EPS of 20-26 per share and 

            Dividend payout from Rs 2.76 to 5.12 per share (before dividend tax)

 

       PN: this is my personal view based on publicly available information. please do your own deep dive before investing