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Multi Baggers

Ventura Securities

5.30 AM Jan 1st 1970

Jain Irrigation

BSE ID : 500219     NSE ID : JISLJALEQS

RECOMMENDED PRICE 96.45

PEAK FROM RECO 150.40 55.94%

CURRENT PRICE 59.10 Resource id #14

Jain Irrigation Systems Ltd (JISL) is currently the world's second largest and India's largest micro irrigation company. We initiate coverage on JISL as a BUY with a price objective of Rs 250.

Jain Irrigation Systems Ltd

Jain Irrigation Systems Ltd (JISL) is currently the world's second largest and India's largest micro irrigation company. Another little known feature is that JISL is the largest global player in mango processing. Its business verticals are as shown below. We initiate coverage on JISL as a BUY with a price objective of Rs 250.

Over the period FY13-16, the performance of Jain Irrigation Systems Ltd (JISL) has been less than exemplary. It was marred by forex losses and high interest payments, which led to PAT losses in FY14. The two years that followed were also marked by lacklustre growth due to the droughtlike situation prevailing in India and Maharashtra in particular.

However, we believe that the fortunes of the company are on the verge of a turn-around, given the good monsoon and the government impetus to kick-start the economy. Further, the infusion of ~Rs 800 crore of capital should help lower interest costs and improve the health of the balance sheet. We expect the revenues to grow at a CAGR of 14.7% to Rs 9,504 crore while the EBITDA and net earnings are expected to grow at a faster pace of 20.8% and 93.7% to Rs 1,440 crore and Rs 641 crore by FY19. EBITDA and PAT margins are also expected to improve to 15.2% (+217 bps) and 6.7% (+534 bps) over the same period.

We initiate coverage on JISL as a BUY with a price objective of Rs 250, representing a potential upside of 160% from the CMP of Rs 96.5. At present, the stock is trading at 5.7X and 4.5X its estimated EV/EBITDA for FY18 and FY19. We have assigned an EV/EBITDA of 12X on FY19 EBITDA.

Disclaimer: Ventura Securities Limited (VSL) is a SEBI registered intermediary offering broking, depository and portfolio management services to clients. VSL is member of BSE, NSE and MCX-SX. VSL is a depository participant of NSDL. VSL states that no disciplinary action whatsoever has been taken by SEBI against it in last five years except administrative warning issued in connection with technical and venial lapses observed while inspection of books of accounts and records. Ventura Commodities Limited, Ventura Guaranty Limited, Ventura Insurance Brokers Limited and Ventura Allied Services Private Limited are associates of VSL. Research Analyst (RA) involved in the preparation of this research report and VSL disclose that neither RA nor VSL nor its associates (i) have any financial interest in the company which is the subject matter of this research report (ii) holds ownership of one percent or more in the securities of subject company (iii) have any material conflict of interest at the time of publication of this research report (iv) have received any compensation from the subject company in the past twelve months (v) have managed or co-managed public offering of securities for the subject company in past twelve months (vi) have received any compensation for investment banking merchant banking or brokerage services from the subject company in the past twelve months (vii) have received any compensation for product or services from the subject company in the past twelve months (viii) have received any compensation or other benefits from the subject company or third party in connection with the research report. RA involved in the preparation of this research report discloses that he / she has not served as an officer, director or employee of the subject company. RA involved in the preparation of this research report and VSL discloses that they have not been engaged in the market making activity for the subject company. Our sales people, dealers, traders and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein. We may have earlier issued or may issue in future reports on the companies covered herein with recommendations/ information inconsistent or different those made in this report. In reviewing this document, you should be aware that any or all of the foregoing, among other things, may give rise to or potential conflicts of interest. 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Similarly, this document does not have regard to the specific investment objectives, financial situation/circumstances and the particular needs of any specific person who may receive this document. The securities discussed in this report may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Persons who may receive this document should consider and independently evaluate whether it is suitable for his/ her/their particular circumstances and, if necessary, seek professional/financial advice. And such person shall be responsible for conducting his/her/their own investigation and analysis of the information contained or referred to in this document and of evaluating the merits and risks involved in the securities forming the subject matter of this document. The projections and forecasts described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates on which the projections and forecasts were based will not materialize or will vary significantly from actual results, and such variances will likely increase over time. All projections and forecasts described in this report have been prepared solely by the authors of this report independently of the Company. These projections and forecasts were not prepared with a view toward compliance with published guidelines or generally accepted accounting principles. No independent accountants have expressed an opinion or any other form of assurance on these projections or forecasts. 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