Broking firm KRChoksey initiated coverage on Jain Irrigation Systems Ltd., with a 'Buy' rating, citing rising demand for micro irrigation systems and a good monsoon season.
The broking firm said the Maharashtra state government's compulsory drip irrigation for sugarcane field diktat is likely to add around Rs 1,500 crore to Rs 3,000 crore to the company's topline since it has around 60 percent market share.
Brokerage Estimates
- Net profit seen gaining 72 percent compounded annual growth rate (CAGR) between financial year 2016-17 to financial year 2018-19.
- Revenue for the same period is estimated around 21 percent CAGR.
- Net debt-to-earnings before interest, tax, depreciation and amortisation ratio seen declining to 2.4 times in FY19
- Interest coverage to improve to 2.7 times by FY19
The brokerage said that the robust bottomline growth estimates are largely due to lower finance cost of the company post refinancing and conversion of debentures.
Key Reasons For Strong Estimates:
- Agri-Valley Irrigation and Irrigation Design and Construction acquisition is likely to provide the company with opportunities to capture potential California MIS market.
- The government initiatives and focus to add at least 10 lakh hectares under micro-irrigation are expected to drive polyvinyl chloride segment
- Accelerating usage of high-density polyethylene will improve the company's financial performance.
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