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Agri-biotech sector grows at 30%
The agri-biotech sector in India is growing at 30 per cent for the last five years and it is likely to maintain the growth in the future as well, says a Rabobank report titled “Indian agri-biotech sector: Emerging scenario, issues and challenges”.
In 2006-07, the industry made Rs.926 crore in sales, accounting for 10.84 per cent of the country’s biotech market. In 2005-06, it registered a growth of over 81 per cent salesand it is likely to maintain the growth in the future as wellwith a value of Rs.330
crore in 2004-05.
Why to buy Aries Agro Ltd- Reasons
1) The company is in the process of setting up three manufacturing units - one each at Ahmedabad, Lucknow and Panvel
in Maharashtra - by September 2008 at an outlay of Rs.17 crore.
Post expansion, the company’s manufacturing capacity would increase to 100,800 tonne per annum (TPA), from
21,600 TPA.
2) The company is looking at new potential areas abroad on the export front, Company official said Aries would invest
Rs.7.5 crore in Golden Harvest, a fertilizer company based out of Sharjah, which would in turn invest 25 per cent in
UAE-based Mapco Fertilisers for setting up two plants to cater to the growing demand in the region. Company official
said these plants to go operational by this year end.
3) The company toady inaugurated its secondary, micronutrients and water soluble major fertilizers manufacturing facility,
it’s fifth in the country, at Pashamylaram in Medak district on Andhra Pradesh. The plant, touted as the country’s
largest manufacturing unit for micronutrients, capacity of this plant. Besides the capacity to manufacture 32,400 TAP,
it will be engaged in the packaging of other major brands including Macrofert, Boron 20 and Fertimax with a packaging
capacity of nine million pouches a year.
Aries Agro, which achieved a turnover of Rs.74 crore, last year, expects to close the current financial year with
revenues of Rs.103 crore. Its outlook for the 2008-09 fiscal is Rs.150 crore.
Projected Revenue growth
Year 2006 - 07 - 74 crore
Year 2007 - 08 - 103 crore
Year 2008 - 09 - 150 crore
Year 2009 - 10 - 200 crore
Buy Aries Agro Ltd
CMP - Rs.141.15
Target - Rs.200 for 12 to 18 months.
2. Jain Irrigation Systems Ltd
Government strategies about Agriculture
Government is increasing focus on irrigation. Under the irrigation scheme of Bharat Nirman Programme the government is targeting to bring more area under cultivation including new land besides improving utilization of existing irrigation land. It is also planning to penetrate more on new advanced technologies like micro irrigation systems.
About Company (Jain irrigation)
1)Jain irrigation is a leader in micro irrigation systems with over 50% market share.
2)It offers a range of products to name few - dip irrigation systems, sprinkler irrigation systems and many more.
3)The Company has also done an overseas acquisition which makes it to expand in geographical locations across the world.
4)The Company is also present in PVC pipes and plastic sheets, food processing.
Past performance
The company has achieved CAGR (Compounded Annual Growth Rate) of 40% in last 4 to 5 years.
Company’s Expectation
1)The Company domestics’ micro irrigation business is expected to maintain in 45 - 50% over the next 3 to 4 years.
2)Food processing business is expected to grow by 60% in financial year 2008, Jain irrigation comes in the top bracket in this segment
Conclusion
The company is not only operates in high growth areas, but these areas also offer high long-term growth visibility, which should help Jain Irrigation maintain strong growth in earnings over the next few years. The fruits of its investments into overseas markets including the acquisition, will also fuel growth. The improvement in operational efficiency of these acquired companies and access of the new technologies and markets should also reflects positively on consolidated numbers going forward. At the current market price, the stock trades at 27 and 16 times its estimated FY09 and FY10 estimated earnings, respectively and is a worthy investment.
1. Aries Agro Ltd - projecting Rs.200cr revenues
About Aries Agro Ltd -
Mumbai-based Aries Agro Limited, a manufacturer of micronutrients and specialty fertilizers, is targeting to achieve a turnover of Rs.200 crore during the 2009-10 financial year on the back of its proposed capacity expansion.
CMP = RS 656.35
Expected Returns - 40 to 50 % in 12 to 24 months
3. Crompton Greaves Ltd
About Company
1) The company manufactures products related to power generation, transmission and distribution.
2) The company also undertakes projects to execute.
3) The company also manufactures industrial equipments like motors, alternates drives, railway transportation and signals
equipments.
4) Due to various overseas acquisitions the company has access to various overseas markets. The company is seventh
largest transformer manufacturer and market share of about 4% and access to USA and European markets.
Recent Updates
1) The company has own contract worth Rs.2600 crore for power distribution in Nagpur city.
2) The company acquired a 60% stake in Belgium based pauwels in May 2005 in Europe.
3) It has also acquired hungry based Gant Tran electro in October 2006.
4) In May 2007, the company acquired micro sol which is Ireland based.
Note - The benefits of all above acquisitions are expected to come in next couple of years.
Futures Plans
1) Power generation capacity addition of 78,000 MW by 2012 which requires 3 lakh crore.
2) The company is looking for overseas acquisition to expand its industrial system business.
Revenues Generation
According to the estimates the consolidated net profit, which was about Rs.237.5 crore in FY-07 will grow by 64.3% in FY-08 on account of the integration of various overseas companies.
Contribution of Overseas Acquisitions
1) Pauwel has contribution 64.4 crore in FY-07 and 113.7 crore as net profit in FY-08.
2) Gant and Micro sol Holdings are expected to contribute partially in FY-09 and fully in FY-10.
Expected Returns
At current market price of Rs 255 and taking into consideration of potential future growth it has upside of minimum
60 to 70 % in next 12 to 18 months.
Following is the table of financial ratios and netprofit of Crompton greaves in past 4 years.
It is very clear from the table that net profit and sales kept on increasing on year after after while debit kept on decreasing
which shows the sign of healthy compnay.
Electric Equipments Manufacturer
Manufacturer of Pipes
4. Welspun Gujarat Stahl Rohren Ltd (WELGUJ)
About Company
It is the one of the top three pipe companies in India which manufactures pipes like longitudinal Submerged Arc Welded pipes (LSAW) and Helical Submerged Arc Welded pipes (HSAW). These types of pipes are used for transportation of oil, gas and water.
Returns
CMP - Rs.388.70
Buying Price - Buy below Rs.350 and grab if the stock price go to Rs.300.
Returns = 40% to 50% expected in 12 to 18 Months.
Markets are volatile so there are chances for stock price to go below,
Financial Earnings
Future Potential
1. Globally there is a robust investment plan for pipelines and replacement in USA, Canada and Europe. Approximately
$88 billion investment in pipeline infrastructure is planned for the next 5 to 7 years.
2. Also about one million miles of pipelines are due for replacement over next couple of years whose estimation is around
$400 billion.
3. Adding to this global demand and requirement, there is going to be strong demand for pipes in India.
Expansion Plans
By March 2009 the capacities of LSAW pipes from 3.5 lakh tones will be increased to 6.5 lakh tones and HSAW pipes from 4 lakh tones to 8.5 lakh tones.
Disclaimer: Information presented on this site is a guide only. It may not necessarily be correct and is not intended to be taken as financial advice nor has it been prepared with regard to the individual investment needs and objectives or financial situation of any particular person. Stock quotes are believed to be accurate and correctly dated, but StockMarketIndian.com does not warrant or guarantee their accuracy or date.
Copyright © 2007 StockMarketIndian.com All Rights Reserved
| Financial ratios |
2007/03 |
2006/03 |
2005/03 |
2004/03 |
Sales
(Figures in crores) |
3,401.17
|
2,576.22
|
2,066.74
|
1,714.28
|
Net Profit
(Figures in crores) |
192.37
|
163.05
|
114.78
|
70.83
|
Debt to equity ratio
(Figures in crores) |
0.24
|
0.39
|
0.51
|
0.46
|
| Financial ratios |
2007/03 |
2006/03 |
2005/03 |
2004/03 |
Sales
(Figures in crores) |
2,678.48
|
1,829.77
|
1,038.49
|
831.77 |
Net Profit
(Figures in crores) |
142.59 |
61.37 |
33.83 |
71.98 |
Debt to equity ratio
(Figures in crores) |
2.26
|
1.39
|
1.19
|
0.51
|