[Date: May 27, 2018 ; 07:36 p.m.]
Risk Category : Mid to High
Jain Irrigation ( Current Market Price : 104.60, Target Price : 140 ; Tenure: 3–4 Months)
About the Company: Jain Irrigation Systems Limited is an agri-business company. The Company is engaged in manufacture of plastic products, and manufacture of fruit or vegetable juices, their concentrates squashes and powder. It provides various plastic piping systems that are used in conveyance of fluids, semisolids, gases and cables. It manufactures a range of precision-irrigation products. The Company has approximately 30 manufacturing plants globally.
1) Stock is trading at just 19 times of its FY18 earning. At CMP of 103.90 Rs. with an EPS of 5.39 Rs with book value of 87 Rs.
2) Company has been delivering better results from last three quarters and see, 13 Cr. to 92 Cr, in just two quarters after management changes. For the quarter ended 31-03-2018, the company has reported a Consolidated sales of Rs 2777.70 Crore, up 47.00 % from last quarter Sales of Rs 1889.63 Crore and up 24.36 % from last year same quarter Sales of Rs 2233.63 Crore Company has reported net profit after tax of Rs 91.18 Crore in latest quarter.
3) Jain irrigation is virtual monopoly with three dead peers.
4) Cash flow from operations should be positive, always even if investing and financing won’t work. ‘Cash crunch’ has never been an issue for Jain Irrigation.
5) Debt is considerable with D/E = 0.5
6) Not just we, Domestic institutional investors/ Mutual funds invested millions of rupees.
7) ROE: 4.07 ( Peers Avg: 3.54), ROCE 7.10 ( Peers Avg 5.64), What else required?
8) Technical summery has some mixed set of response but as I gave 3–4 months time that then it may test 130–140 in short term post strong quarter.
2) Mahanagar Gas ( Current Market Price : 790.85 , Target Price : 1000 Rs ; Tenure: 3–4 Months)
About the Company: Mahanagar Gas Limited is a city gas distribution company. The Company is engaged in the distribution of compressed natural gas (CNG) and piped natural gas (PNG) in Mumbai and its adjoining areas and in the Raigad district in the state of Maharashtra, India. It also installs gas geysers. Its commercial PNG has various applications in hospitals, hotels, power, charitable trusts and industries.
1) Stock is trading at just 16 times of its FY18 earning. At CMP of 790 Rs. with an EPS of 48 Rs with book value of 187 Rs.
2) For the quarter ended 31-03-2018, the company has reported a Standalone sales of Rs 586.98 Crore, up .96 % from last quarter Sales of Rs 581.41 Crore and up 11.74 % from last year same quarter Sales of Rs 525.33 Crore Company has reported net profit after tax of Rs 104.76 Crore in latest quarter.
3) Just observe the financial heath and then compare it with its peers, you would buy it now for even long term, No doubt.
4) Promoters hold approx 65% stake ( domestic and foreign).
5) Company is completely debt free. The way company reduced the debt is the result of its management.
6) Company delivered its highest revenue of 587 Cr. in this quarter.
7) Company distributes regular dividend.
8) Again Cash and cash equivalent is positive and cash generated from its operating activity is massive so less chance for cash crunch.
Both stocks are the safer bet too and can be bought and held for longer term.
Thank you for your time and apologies for typos(If any).
Akshay Seth Research Analyst, Co-founder Equityboxx https://www.linkedin.com/in/akshay-seth-1b7a1668/