Jain Irrigation Systems (JISL) has consistently delivered over 40% growth in revenues since the past 3-4 years owing to strong growth clocked by the Micro Irrigation (MI) segment. It has also been active on the acquisitions front — both domestic and foreign.
The government has allocated Rs237 crore for development of MI systems in Maharashtra. JISL derives a majority of its MI segment revenues from Maharashtra, Andhra Pradesh, Gujarat and Madhya Pradesh.
The allocation is expected to propel growth of the MI segment and invariably benefit JISL as it’s the largest supplier of MI systems to the state.
The company reported a healthy 59.2% y-o-y jump in FY08 consolidated revenues to Rs2,216 crore. PAT also surged in tandem with the increase in revenue by over 59% y-o-y to Rs132.4 crore.
We believe JISL is poised to post over 35-40% revenue growth over the next 2-4 years owing to healthy growth recorded by the MI segment.
Acquisitions made by the company over the last couple of years are also expected to lend a boost to its OPMs, which would result in healthy growth in earnings.
Owing to the Margin pressure faced by the subsidiaries in FY08, we have marginally revised our estimates downwards.
At Rs428, the stock is currently available at attractive valuations of 11.5x FY10E consolidated FDEPS of Rs37.3. We maintain a BUY on the stock with a revised target price of Rs633 (Rs679).