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India Equity Research Reports, IPO and Stock News
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A good start to the year
Jain’s 1QFY12 net rose 58%YoY to Rs824m. Ebitda rose 30%YoY and was 10%
ahead of estimate on higher agro revenues and margins. Micro-irrigation Ebitda
was inline. As expected, gross debtors here fell ~20days QoQ while net debtors
rose on lower discounting. This coupled with the seasonal rise in agro-inventory
led to a ~Rs2.5bn QoQ rise in net w-cap and net debt. However, with states
starting to release subsidy payments, we expect micro-irrigation debtors to fall
over time strengthening gearing ratios and helping Jain turn FCF positive by FY13.
This rebound in cashflow should also bring focus back on the secular micro
irrigation investment theme; valuations are reasonable at 12.5x Mar13 PE. BUY.
1QFY12 ahead of estimates; forex loss, lower tax rates
Jain 1QFY12 net profits rose 58%YoY to Rs824m despite a Rs136m MTM forex loss on
a CHF denominated US$30m supplier credit line due to the sharp ~9% appreciation of
the CHF in the quarter. Despite this, net profits were higher than estimates due to
lower tax rates (28%, higher R&D set-offs, 80IB benefits) and a higher than expected
Rs130m incentive under the Maharashtra mega project scheme. The latter should recur
at Rs400m annually for six-to-seven years; we had built this into our models earlier.
Ebitda ~10% higher than estimate on strong agro; micro-irrigation inline
Core Ebitda was up 30%YoY and was 10% ahead of estimates. Micro-irrigation Ebitda
(+26%YoY) was inline as marginally higher revenue growth (+30%YoY) was offset by
marginally lower Ebitda margins (30.3%, -1ppt YoY). While PVC pipes (destocking), PE
pipes (lower ducting revenues) and PVC sheets (lower Europe) remained subdued,
agro Ebitda more than doubled on strong revenue and margins in onions (Australia,
Europe, lower onion prices) and fruits (Coke, exports, a strong processing season).
Gross micro-irrigation receivables down ~20 days QoQ as expected
As expected, gross micro-irrigation debtors remained flat QoQ at Rs17bn cutting ratios
~20days QoQ to 349-days. Net debtors rose 20-days on lower bill discounting. This
coupled with the seasonal rise in agro-inventory led to ~Rs2.5bn QoQ rise in net
working capital and net debt. However, with states starting to release payments, we
expect micro-irrigation debtors to fall modelling a further cut of 10-days by Mar-12.
Management is more optimistic hoping for a cut of 40-50 days; in the post-results
analyst call it highlighted, for example, that Maharashtra may release Rs2-3bn over
the coming month. Every 30-day cut increases EPS by 2-3% on lower financing costs.
Cuts to EPS; rebound in cashflow will help a re-rating; maintain BUY
We are cutting our FY12-14 EPS by ~2-5% to factor in forex losses in 2Q (CHF has
appreciated another 10% since June) and higher interest costs (higher rates) but note
that falling debtors should help Jain turn FCF positive in FY13 and strengthen gearing
ratios helping bring focus back on the core micro irrigation secular investment theme.
Valuations are reasonable at 12.5x Mar13 PE despite Jain’s rebound from lows. BUY.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
A good start to the year
Jain’s 1QFY12 net rose 58%YoY to Rs824m. Ebitda rose 30%YoY and was 10%
ahead of estimate on higher agro revenues and margins. Micro-irrigation Ebitda
was inline. As expected, gross debtors here fell ~20days QoQ while net debtors
rose on lower discounting. This coupled with the seasonal rise in agro-inventory
led to a ~Rs2.5bn QoQ rise in net w-cap and net debt. However, with states
starting to release subsidy payments, we expect micro-irrigation debtors to fall
over time strengthening gearing ratios and helping Jain turn FCF positive by FY13.
This rebound in cashflow should also bring focus back on the secular micro
irrigation investment theme; valuations are reasonable at 12.5x Mar13 PE. BUY.
1QFY12 ahead of estimates; forex loss, lower tax rates
Jain 1QFY12 net profits rose 58%YoY to Rs824m despite a Rs136m MTM forex loss on
a CHF denominated US$30m supplier credit line due to the sharp ~9% appreciation of
the CHF in the quarter. Despite this, net profits were higher than estimates due to
lower tax rates (28%, higher R&D set-offs, 80IB benefits) and a higher than expected
Rs130m incentive under the Maharashtra mega project scheme. The latter should recur
at Rs400m annually for six-to-seven years; we had built this into our models earlier.
Ebitda ~10% higher than estimate on strong agro; micro-irrigation inline
Core Ebitda was up 30%YoY and was 10% ahead of estimates. Micro-irrigation Ebitda
(+26%YoY) was inline as marginally higher revenue growth (+30%YoY) was offset by
marginally lower Ebitda margins (30.3%, -1ppt YoY). While PVC pipes (destocking), PE
pipes (lower ducting revenues) and PVC sheets (lower Europe) remained subdued,
agro Ebitda more than doubled on strong revenue and margins in onions (Australia,
Europe, lower onion prices) and fruits (Coke, exports, a strong processing season).
Gross micro-irrigation receivables down ~20 days QoQ as expected
As expected, gross micro-irrigation debtors remained flat QoQ at Rs17bn cutting ratios
~20days QoQ to 349-days. Net debtors rose 20-days on lower bill discounting. This
coupled with the seasonal rise in agro-inventory led to ~Rs2.5bn QoQ rise in net
working capital and net debt. However, with states starting to release payments, we
expect micro-irrigation debtors to fall modelling a further cut of 10-days by Mar-12.
Management is more optimistic hoping for a cut of 40-50 days; in the post-results
analyst call it highlighted, for example, that Maharashtra may release Rs2-3bn over
the coming month. Every 30-day cut increases EPS by 2-3% on lower financing costs.
Cuts to EPS; rebound in cashflow will help a re-rating; maintain BUY
We are cutting our FY12-14 EPS by ~2-5% to factor in forex losses in 2Q (CHF has
appreciated another 10% since June) and higher interest costs (higher rates) but note
that falling debtors should help Jain turn FCF positive in FY13 and strengthen gearing
ratios helping bring focus back on the core micro irrigation secular investment theme.
Valuations are reasonable at 12.5x Mar13 PE despite Jain’s rebound from lows. BUY.
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