Stock Picks
CMP: 194.85 (30/07/2010) | 52 Weeks High: 227.10 | 52 Weeks Low: 93.10
Jindal Saw Ltd
Jindal Saw Limited is a pipe manufacturing company in India. The Company manufactures large diameter submerged arc welded pipes, spiral pipes and bends for energy transportation sector. Its product portfolio is diversified across end-user segments, such as energy transportation, industrial application, and water and sewerage transportation. The Company has integrated facilities at multiple locations in India. JSL’s operations are structured into three business units: large diameter pipes, such as submerged arc welded (SAW) pipes, seamless tubes and pipes and ductile iron (DI) pipes. Besides these, JSL also provides various value-added products like pipe coatings, bends and connector castings to its clients.
JSL has very good expansion plans; it has already completed expansion of its HSAW plant and is in the process of expanding DI pipe capacity. The Expert Committee of Ministry of Environment and Forests have approved the company’s Rajasthan iron ore mine plant. Environmental clearance is the most stringent of approval stages. We estimate these mines can add more than 20% to the company’s valuation. So we recommend a BUY on the stock with a target price of Rs220/-.
CMP: 813 (30/07/2010) | 52-Weeks High: 912 | 52- Weeks Low: 511
Bayer CropScience Limited
Bayer CropScience Limited (BCS) is an India-based company engaged in the operation of crop protection business in India. The Company’s operations are focused on crop protection, seeds biotechnology and non-agricultural pest control. The Company’s Crop Protection activities are focused on five fields: Insecticides, Fungicides, Herbicides, Seed Treatment and Plant Growth Regulators. The crop protection products brands include Confidor/Admire, Calypso, Decis, Temik, Oberon, Antracol, Baycor, Folicur, Monceren, Atlantis, Basta, Topstar, Whip Super, Gaucho, Raxil, Bayfolan zinc, Ethrel and Planofix. It has production facilities at the Bayer sites in Thane, Himatnagar and Ankleshwar.
BCS is a leader in the Indian agrochemical sector with a market share of 23%. BCS's export revenues registered 15% CAGR during CY2005-FY2010. Around 80% of the company's export revenues come from outsourcing by Bayer AG's group companies. The company's domestic revenues registered steady CAGR of 19% over CY2005-FY2010, which indicates its stronghold in the domestic business. Moreover, going ahead, we believe there exists substantial opportunity for BCS to grow its domestic business considering the abysmal penetration of Pesticides in India. It may be noted that India consumes an average 0.48kg of pesticides per hectare (ha) compared to 4.5kg/ha in USA and 10.7kg/ha in Japan. We believe that the company has good opportunity for growth and we recommend BUY on the stock with a price target of Rs920/-
CMP: 1296 (30/07/2010) | 52 Weeks High: 1355 | 52 Weeks Low: 448
Rallis India Limited
Rallis India Limited is an India-based company dealing in Agri Inputs consisting of pesticides, plant growth nutrients and seeds and fine chemicals. The Agri Inputs include crop protection chemicals, seeds and plant growth nutrients. The crop protection chemicals consist of domestic formulation business, institutional business and international business. The Company’s seeds business includes distribution of Bt cotton, hybrid paddy and hybrid maize seeds. In the institutional business, the Company provides technical and bulk of various molecules to companies like Bayer, Syngenta, Excel, UPL, Gharda, Cheminova, Dhanuka, Nagarjuna and other agrochemical manufacturer.
Globally demand for pesticides is likely to grow at a CAGR of 3 – 4% for next few years. Inspite of having one of the largest cultivable land, usage of agrochemicals is one of the lowest in India. Indian agrochemical industry is poised to grow at 10% p.a. on the back of lower per capita consumption, stagnant acreage under cultivation and yield, rising MSP for crops and increasing population. Rallis is a well established player in the agrochemical space with its sound R&D setup, successful new product launches, widespread distribution network, and strong balance sheet. It is a preferred player for MNC’s for strategic alliance. All these reasons make Rallis attractive and worth investing at current levels. At CMP of Rs. 1296 we initiate our coverage on Rallis India Ltd. with a ‘BUY’ recommendation on the stock with a target price of Rs. 1,390.
