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JAIN IRRIGATION
OUTPERFORMER (RS175, MCAP: RS63BN / US$1.4BN)
• The Indian MIS industry offers a huge opportunity with only 5m ha of the potential 62m ha of irrigated land currently
under the system. Jain Irrigation (JISL) leads the MIS industry in India with a 55% market share. It is also the second
largest MIS player globally. JISL has clocked a commendable 40% CAGR in revenues over FY05-10. Its 40-year legacy
of supplying farming equipment has aided in creating a sound foundation with the farmer community. This is the key
competitive advantage for JISL, given the business entails managing the sector’s three most difficult variables –
farmer, weather and government.
• MIS growth to revive: While JISL has been consistently tracking 35%+ growth every quarter in MIS, the past two
quarters (Q2FY11 and Q3FY11) have been subdued, growing only at ~20% on the back of extended and above-average
rainfall in the country. However, the management is confident of growth reviving from the current quarter. Recent
moves by the government (National Mission on MIS to achieve 2.85m ha over the next two years; Rs80bn of
outlay) reflect the urgency and push towards the space, which should underpin sharper growth for JISL.
• Agro processing – near-term worry: Non-availability of onions has impacted JISL’s onion dehydration segment.
However, with prices now showing signs of correction, the segment is expected to revive. In fruit processing, JISL
continues to register strong growth backed by an improved product mix (higher Alphonso sales). The fruit-processing
order book for the year is very strong at ~Rs3bn.
• Corporate actions – bonus DVR: The Board has recommended issuance of bonus equity shares with differential
voting rights (DVR) in the ratio of 1 DVR equity share for every 20 equity shares held. Ten DVR equity shares will
carry voting rights equivalent to 1 equity share. JISL is testing the market for such an instrument with the intent of
raising capital via DVRs.
• NBFC on the cards: The Board has also approved plans to set up an NBFC and JISL intends to apply to the RBI for the
same. The company is looking to provide credit to farmers through this arrangement, which in turn could help it
bring down receivables and improve its working capital cycle in the MIS business.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
JAIN IRRIGATION
OUTPERFORMER (RS175, MCAP: RS63BN / US$1.4BN)
• The Indian MIS industry offers a huge opportunity with only 5m ha of the potential 62m ha of irrigated land currently
under the system. Jain Irrigation (JISL) leads the MIS industry in India with a 55% market share. It is also the second
largest MIS player globally. JISL has clocked a commendable 40% CAGR in revenues over FY05-10. Its 40-year legacy
of supplying farming equipment has aided in creating a sound foundation with the farmer community. This is the key
competitive advantage for JISL, given the business entails managing the sector’s three most difficult variables –
farmer, weather and government.
• MIS growth to revive: While JISL has been consistently tracking 35%+ growth every quarter in MIS, the past two
quarters (Q2FY11 and Q3FY11) have been subdued, growing only at ~20% on the back of extended and above-average
rainfall in the country. However, the management is confident of growth reviving from the current quarter. Recent
moves by the government (National Mission on MIS to achieve 2.85m ha over the next two years; Rs80bn of
outlay) reflect the urgency and push towards the space, which should underpin sharper growth for JISL.
• Agro processing – near-term worry: Non-availability of onions has impacted JISL’s onion dehydration segment.
However, with prices now showing signs of correction, the segment is expected to revive. In fruit processing, JISL
continues to register strong growth backed by an improved product mix (higher Alphonso sales). The fruit-processing
order book for the year is very strong at ~Rs3bn.
• Corporate actions – bonus DVR: The Board has recommended issuance of bonus equity shares with differential
voting rights (DVR) in the ratio of 1 DVR equity share for every 20 equity shares held. Ten DVR equity shares will
carry voting rights equivalent to 1 equity share. JISL is testing the market for such an instrument with the intent of
raising capital via DVRs.
• NBFC on the cards: The Board has also approved plans to set up an NBFC and JISL intends to apply to the RBI for the
same. The company is looking to provide credit to farmers through this arrangement, which in turn could help it
bring down receivables and improve its working capital cycle in the MIS business.
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