JainIrrigation Karvy Sept24-2015

Sep 23, 2015
Jain Irrigation Sep

Systems
Ltd
23, 2015
Industrials - Machinery - Agricultural Machinery
Jain Irrigation Systems Ltd

Bloomberg Code: JI IN
BUY
India Research - Stock Broking
NBFC Led Business Model to Eliminate the Balance Sheet

setbacks, Debt reduction is Key for Margin Expansion
Recommendation (Rs.)
CMP
60
JISL to bring in synergies to its MIS business:
Upside (%)
26
For the customers in the
irrigation business, there are not many financing options available for farming
activities. JISL has floated Sustainable Agro Commercial Finance Ltd (SAFL),
a NBFC which provides finance to farmers. This could able to ease its stretched
balance sheet and reduce the working capital cycle.
Margins likely to expand: Polymers are the raw materials for piping as well as
irrigation business; and are the derivatives of crude oil. Softening crude oil prices
could decline the raw material costs. With a presumption of lower crude oil prices,
the margins could expand during the coming years.
Target Price
75
Stock Information
Mkt Cap (Rs.mn/US$ mn)
26169 / 396
3M Avg. daily volume (mn)
4.3
52-wk High/Low (Rs.)

Beta (x)
Sensex/Nifty
93 / 51
1.5
25823 / 7846
O/S Shares(mn)
443.1
Face Value (Rs.)
2.0
Shareholding Pattern (%)

Promoters
28.7
augurs well for the company towards needs of the customers and expansion of the
DIIs
11.7
High entry barrier business:
Stock Performance (%)
Widespread dealer network for MIS growth:
Strong dealer network of over
4000 with farming background and are influential in their respective regions
FIIs
business.
Others
In the context of dealing with Government,
dependence on Government subsidies, inherent issues of weather etc make it

difficult for the other players to enter into this MIS business.
31.9
27.8
Absolute
Relative to Sensex
1M
3M
6M
12M
(6)
(14)
(2)
(32)
(0)
(8)
(30)
Source: Bloomberg
Valuation and Outlook

Going ahead, we anticipate better operational performance and lower interest
costs to drive PAT growth. However, debt reduction remains a key monitorable. We
initiate BUY with a target price of Rs.75, based on 15x FY17E EPS. At current
levels, the stock is trading at 16.8x FY16E EPS and 11.8x FY17E EPS.
Relative Performance*
200
150
100
Key Risks
50
0
yyWithdrawal of subsidies.
Jul-12
yyExposed to foreign currency fluctuations.
Jul-13
Sensex
Jul-14
Jul-15
JISL
Source: Bloomberg; *Index 100
Exhibit 1: Valuation Summary (Rs. Mn)

YE Mar (Rs. Mn)
Net Sales
EBITDA
EBITDA Margin (%)

Adj. Net Profit
FY13
FY14
FY15
FY16E
FY17E
50217
58281
61579
66669
71145
14.4
13.2
12.8
13.2
13.7
7253
31
(398)
0.1
(1.8)
EPS (Rs.)
0.1
PE (x)
NA
RoE (%)
7700
(0.9)
NA
7875
8829
9772
553
1645
2333
2.6
7.1
9.3
1.2
NA
3.6
16.8
5.0
11.8
Source: Company, Karvy Research
For private circulation only. For important information about Karvys rating system and other disclosures refer
to the end of this material. Karvy Stock Broking Research is also available on Bloomberg, KRVY<GO>,
Thomson Publishers & Reuters
Analyst Contact
Joyjit Sinha
040 - 3321 6275
joyjit.sinha@karvy.com
Sep 23, 2015

Company Background
Company Financial Snapshot (Y/E Mar)

Profit & Loss (Rs. Mn)
FY15
FY16E
FY17E
Net sales
61579
66669
71145
EBITDA
7875
8829
9772
Optg. Exp (Adj for OI)
53704
Depreciation
57840
2441
Interest
2541
4692
Other Income
4394
331
PBT
451
1073
Tax
2345
61373
2691
4232
478
3327
(239)
(703)
(998)
12.8
13.2
13.7
P/E (x)
NA
16.8
11.8
Dividend yield (%)
0.8
0.8
0.8
Adj. PAT
553
1645
2333
Profit & Loss Ratios

EBITDA margin (%)
Net profit margin (%)
0.9
EV/EBITDA (x)
2.5
5.3
4.7
Jain Irrigation Systems Ltd (JISL) operating in Micro Irrigation

industry and manufactures Drip and Sprinkler Irrigation systems
and components, PVC Pipes, Polyethylene & Polypropylene
Piping Systems; Plastic Sheets; Agro Processed Products
include Dehydrated Onions and Vegetables; Processed Fruits
(Purees, Concentrates & Juices); Tissue Culture, Hybrid &
Grafted Plants; Greenhouses, Poly and Shade Houses; Biofertilizers; Green energy solutions include Solar Photovoltaic
(Solar lighting and appliances, Solar pumping systems),
Solar water heating systems, Bio-Energy sources, Financial
services and other agricultural inputs since last 27 years. JISL
is operating with 14 subsidiary operating companies (including
2nd step subsidiaries). It has 26 plants across 116 countries
and 5485 distributors around the globe.
3.3
4.1
Cash Flow (Rs. Mn)
Balance sheet (Rs. Mn)

FY15
FY16E
FY17E
Total Assets
83799
85768
88007
PBT (after exceptional item)
Current assets
49289
52450
54853
Interest (net)
Net Fixed assets
24531
Other assets
25036
8933
7159
25195
6751
Total Liabilities
83799
85767
88006
Debt
16957
16275
15675
Networth
21399
Current Liabilities
23199
43783
Other Liabilities
44838
1660
1455
25079
45766
1486
Balance Sheet Ratios

RoE (%)
2.6
RoCE (%)
Net Debt/Equity
7.1
15.0
17.1
18.5
0.3
0.3
0.3
1.8
Equity/Total Assets
P/BV (x)
1.7
1.3
1.2
Exhibit 2: Shareholding Pattern (%)
Others
27.8%
9.3
1.5
1.1
FY16E
FY17E
310
2345
3327
4692
4394
4232
Depreciation
2441
Tax
(271)
Changes in WC
Others
CF from Operations
2541
(561)
2691
(859)
(868)
(2380)
(1381)
6613
6825
8307
307
486
296
Capex
(2205)
(1643)
(3000)
CF from Investing
(2288)
(1454)
(2811)
(270)
(270)
(270)
Others
(83)
Change in Debt
1656
Dividends
Interest paid
(4640)
CF from Financing
(3254)
Change in Cash
1070
189
(982)
(4394)
(5646)
(275)
189
(900)
(4232)
(5402)
93
Exhibit 3: Revenue Segmentation (%)
Promoters
28.7%
Industrial
Products
35.6%
DIIs
11.7%
Green Energy
2.1%
Hi-tech
agri input
products
62.3%
FIIs
31.9%
FY15
Sep 23, 2015

Financial and Operational consolidation to drive bottom line:

JISL is the largest supplier of Micro Irrigation Systems (MIS) in India. Its strong brand name along with agricultural expertise and
broad network of dealers are the contributors to its growth. During FY13 and FY14, it has consolidated its main MIS business,
which has good revenue growth through recovery of receivables. Starting FY15, the management has indicated its focus on
positive revenue growth.
Focus on positive cash flow and deleveraged Balance Sheet:

For the customers in the irrigation business, there are not many financing options available to farming and due to delayed
subsidy on irrigation products. This has resulted into stretched Balance Sheet with shoot up in the receivables. To minimise this
complex situation, the company has initiated a Non-Banking Financial Company (NBFC) to finance the customers.
The current equity subscription of this NBFC is Rs. 1,200 Mn, with the company holding 49%, Promoter Group (Jain Family)
holding 21%, Mandala Capital holding 20% while World Banks Private Equity Arm IFC (International Finance Corporation)
holds 10% of equity share capital. With this structure, the company can provide financing to the farmers during the delay period
till the receipt of the subsidy from the governments and eventually this will create financial liquidity in the farming sector.
World Micro Irrigation and sprinkler irrigation could be new opportunities for global expansion:
The World Micro Irrigation (MI) market is one of the fastest growing segments of global agricultural industry. Increase in crop
production, protection against drought-like situation are the major drivers of the MI market. Where there is scarcity and costly
labour, large areas need to be irrigated with minimum waste of time and water, MI systems come into play. The global market
players like JISL to be benefited from responding to these new opportunities by expanding their global presence and product
lines.
Huge scope for improvement in efficient water irrigation:

MI system is one of the most efficient ways of watering crops and plants. The agricultural sector consumes over 80 percent of the
available water in India. Sustained focus of the government on pushing micro-irrigation as a tool to conserve water and address
the issue of food security could drive the demand for MI technique. JISL likely to be hugely benefited responding to the demand.
Government subsidies and reforms like Pradhan Mantri Krishi Sinchai Yojana (PMKSY) likely to contribute
towards JISLs growth:
The Governments (Central and State) provide upto 50% of capital subsidy for promoting the use of Micro Irrigation by farmers.
This can be said that the Government is encouraging for adoption of MI system as regular practice for future safety due to water
scarcity, in order to conserve natural water resources.
Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister, has given approval to a new scheme named
Pradhan Mantri Krishi Sinchayee Yojana (PMKSY). It will have an outlay of Rs.500 Bn over a period of 5 years (FY16 to
FY20) and the allocation during the current financial year is Rs. 53 Bn. One of the major objectives of PMKSY is to improve
on-farm water use efficiency to reduce wastage of water, enhance the adoption of precision-irrigation and other water saving
technologies (more crop per drop). Being a leading manufacturer and supplier of irrigation systems, PVC & Polyethylene pipes,
there could be every chance that JISL could be benefited from such scheme of Indian government.
GoIs focus on agriculture, sanitation and infrastructure segments augurs well for its Polyethylene Pipes (PE
Pipes), Fittings PVC pipes and fittings business:
Piping industry for next decade expected to grow at 15% CAGR which is mainly because of demand in agriculture pipes,
plumbing pipes and industrial pipes. A robust demand is expected for Polyethylene Pipes (PE Pipes) fittings, PVC pipes fittings
from the irrigation and sanitation space in the coming years. Users are opting for PE pipes and PVC sheets due to its techno
commercial superiority. Governments massive drive towards improving infrastructure in the country has been giving positive
vibes to the PE Pipes segment of the market.
PE pipes used for making availability of water to the farmers replacing canals, PE pipe network used for gas transportation,
Irrigation-Sprinkler and drip segment and also transportation of drinking water segment as well. Concept of green building is
growing at rapid space to boost the products of PVC sheets like PVC doors and windows replacing wooden doors and windows.
Widespread dealer network for MIS growth:

In India, JISL has strong dealer network of over 4000, with most of them are from farming background and are influential in
their respective regions. This strong local sales force gives JISL a deep insight towards the needs of its customers in India and
assists the company in providing strong after-sales support and sharing knowledge with the customers.
3
Sep 23, 2015

Well diversified business model to de-risk the business

Exhibit 4:
Green
Energy
1,266
Industrial
Products
21,944
Hi-tech
agri input
products
38,369
JISL offers its services & products to various segments like Hi-tech agri
input products, industrial products and green energy. We believe that the
company is well insulated from any economic slowdown as its multiple
businesses could maintain its top line growth even during slowdown in
other sectors. Its diversified business model not only acts as a profitability
driver but also insulates it from slowdown in any segment.
Geographical diversification of revenue to insulate from sales and operations in particular region
Exhibit 5:
North
America
9.8%
Rest of the
World
18.6%
India
54.9%
Europe
16.7%
JISL has production and processing facilities across India; sales growing
in various states of India and internationally, which makes its sales and
production less susceptible to weather or other risks in a particular region.
JISL is set to expand internationally and looking for opportunities for future
growth especially in agriculture markets. Its revenue is diversified across
wide range of products and customers. No single customer accounts for
more than 5% of its total revenue in FY14.
One-stop-shop for total Agricultural input needs:

JISL has the capability and adequate support infrastructure to take up total turnkey agricultural development projects of any size
within the country or abroad, irrespective of land, topography, soil, water and other agro climatic conditions.
It has taken some end-to-end water solution projects by transporting water, creating new water reservoirs, creating irrigation
systems and assisting with agronomy through the canal command area projects and aimed to do more such projects for a
sustainable growth. Some of the African countries shown good interest in such projects due to JISLs inherent competencies
and technical supremacy in this field.
JISL positioning to capitalize on the growing opportunities in the world food processing Industry:
JISL is largest manufacturer of Mango pulp, puree and concentrate in the world, and the third largest manufacturer of dehydrated
onions the largest manufacturer of Tissue Culture banana plants in the world. India ranks first in the world in production of fruits
and second in vegetables, accounting roughly 10 and 15 percent, respectively, of total global production. Despite the large
production of fruits and vegetables, it is estimated that only approximately 6 per cent of total agro output of India is currently
processed as against up to 60-80 per cent in some developed countries. Indias share in the global food trade is only 1.5%. All
of this implies that there is a great potential to grow for this industry. An increase from 6% to 20% in terms of processing and
increase in value addition from 20% to 30% will translate into quantum jump in the size of the processed fruit and vegetable
industry. The National policy aims to increase the percentage of food being processed in the country to 25 percent by 2025.
It is proposed by the companys management that JISL Indian Food Business to carve out to form a wholly owned subsidiary
company named as Jain Farm Fresh Foods Limited (JFFFL). The carving out of Indian Food Business to JFFFL will also allow
creation of strategic focus and value creation opportunity as a consequence. This could enable the company to organize its
foods vertical under an independent and focused management and achieve benefits of scale. Management expected to achieve
15-20% growth in food business during FY16E.
Sep 23, 2015

Exhibit 6: Business Assumptions
Y/E Mar (Rs. Mn)
FY14
FY15
FY16E
FY17E Comments
Consolidated
Revenue
Management guides a double digit growth during

FY16E. It expects to achieve 15% to 20% growth
in MIS and food businesses in FY16E. We have
71145 assumed more conservatively growth rates of
12% and 8% in MIS business for FY16E and
FY17E respectively; and 5% growth on YoY basis
for both FY16E and FY17E.
58281
61579
66669
Revenue Growth (%)
16.1
5.7
8.3
EBITDA
7700
7875
8829
EBITDA Margins (%)
13.2
12.8
13.2
EBIT
6117
5765
6739
7559
We kept the finance cost consistent though the

management indicated for a reduction of debt
2333 during FY16E. We have assumed there could be
reduction in finance cost during FY17E in line with
reduction of the debt.
6.7
Polymers are the raw materials for piping as well

as irrigation business which are the derivatives
of crude business. Softening of crude oil prices
could decline the raw material prices. We have
9772
assumed a decline of 1% for both FY16E and
FY17E on pricing of raw materials to sales
multiple. Management guides for a fall of 5% to 6%
of polyethylene prices.
13.7 We are expecting the EBITDA margins to expand.
Net profit after all adjustments
(398)
553
1645
EPS
(0.9)
1.2
3.6
5.0
-to +
194.0
41.8
(2205)
(1643)
(3000)
EPS Growth (%)

Capex (ex. Acquisition) - cash capex
(3322)
Net CFO
Net Debt (LT + ST)
We expect EBIT to grow at 17% and 12% on YoY

basis during FY16E and FY17E.
Management guides for a capex of ~ Rs.1500 mn
during FY16E.
We are expecting robust cash flow from operation

8307 on the back of increase in sales and improvement
in debtors collection period.
5731
6613
6825
36866
39358
38376
37476
2409
4408
5182
5307
Free Cash Flow
We expect EBIT to grow at 17% and 12% during

YoY basis during FY16E and FY17E.
Management indicated there could be a reduction

of debt which we assumed during FY17E.
A robust free cash flow owing to good top line
growth and decline of debtor collection period.
Exhibit 7: Karvy vs Consensus

Karvy
Consensus
Divergence (%)
FY16E
66669
67273
(0.9)
FY17E
71145
76402
(6.9)
FY16E
8829
9099
(3.0)
FY17E
9772
10720
(8.8)
FY16E
3.6
4.2
(14.3)
FY17E
5.0
7.0
(27.7)
Comments
Revenues (Rs. Mn)
EBITDA (Rs. Mn)
EPS (Rs.)
We have assumed conservatively a growth rates

of 12% and 8% in MIS business for FY16E and
FY17E respectively; and 5% growth on YoY
basis for both FY16E and FY17E. Management
guides for a double digit growth of 15-20% in
MIS and Food businesses.
Source: Bloomberg, Karvy Research
Sep 23, 2015

Exhibit 8: Operating Revenu
58281
50217
20000
49206
40000
2.1%
8.3% 6.7%
71145
60000
5.7%
66669
16.1%
61579
80000
20%
15%
10%
5%
FY17E
FY16E
FY15
FY14
FY13
0%
FY12
We expect the revenue to grow at a CAGR of 9% during FY14-FY17E. We

have anticipated a double digit growth in Hi-tech agri input products and
nominal growth in industrial products and green energy. We expect JISLs
overall operating revenue to grow at 8% and 7% during FY16E and FY17E
respectively.
Operating Revenue (Rs in Mn)

Growth (%)
Exhibit 9: Segment Revenue (Rs in Mn)

YE Mar (Rs. Mn)
Hi-tech agri input products
Industrial Products
FY12
FY13
FY14
FY15
33798
31656
36347
38369
1770
1266
13536
16252
20165
Hi-tech agri input products
21.8
17.6
14.3
13.9
Non-conventional energy
20.1
17.1
15.3
10.4
Green Energy
1872
2309
21944
EBIT Margins (%)

Industrial products
9.9
7.3
9.5
9.9
Exhibit 10: EBITDA (Rs. Mn) & EBITDA Margin (%)

13.7%
9772
13.2%
8829
7875
7700
14.4% 13.2% 12.8%

7253
5000
16.6%
8155
10000
20%
15%
10%
5%
FY17E
FY16E
FY15
FY14
FY13
0%
FY12
We expect the EBIDTA to register a growth of 9.5% CAGR during

FY14-FY17E. JISL likely to maintain the margins at 13-14% during
FY15-FY17E. Softening crude prices could decline the polymer prices
which might help to improve the margins further.
EBITDA (Rs. Mn )
EBITDA Margins (%)
PAT (Rs in Mn )
4
2
0
-2
FY17E
553
-0.7
FY14
-398
31
FY13
FY12
-500
0.1
FY15
0.9
500
3.3
1645
2.5
FY16E
1500
4.5
2235
2500
2333
Exhibit 11: PAT and PAT Growth
We expect the net profit has recovered to Rs. 553 mn during FY15. We
expect the growth momentum to be maintained by the company on the
back of improving top line and decrease in raw material prices. We expect
PAT to register growth of 198% and 42% during FY16E and FY17E on YoY
basis.
Growth (%)
Sep 23, 2015

Exhibit 12: RoE and RoCE (%)
23.6%
20%
17.3% 16.7%
12.7%
15%
15.0%
17.1%
7.1%
10%
9.3%
5%
0%
RoCE (%)
FY16E
FY14
-5%
FY13
FY12
0%
15%
10%
-1.8% 2.6%
0.1%
FY15
5%
18.5%
JISLs RoE (Return on Equity) is modest because of high finance cost. Its
RoCE has always been strong and we expect that it will be stable in the
coming years.
FY17E
25%
RoE (%) (RHS)
Exhibit 13: Debtors and Collection Period
18768
111
111
21904
111
20505
118
18770
10000
154
21129
20000
168
22712
30000
150
100
50
Debtors are in line with the revenue but the collection period declined from
168 days in FY12 to 111 days in FY15.
FY17E
FY16E
FY15
FY14
FY13
0
FY12
200
Average Debtors (Rs in Mn)

Collection period (in days)
Exhibit 14: Return on Assets

4%
3.0%
2.7%
3%
1.9%
2%
0.7%
FY17E
FY16E
FY13
-1%
FY12
0%
We expect return on assets to recover in the next couple of years.
-0.5%
FY15
0.0%
FY14
1%
Return on Assets
Exhibit 15: Current Ratio

1.25
1.15
1.10
1.2
1.2
1.20
1.1
1.1
1.2
1.1
JISL maintained current ratio at more than 1x indicating that the company
is meeting the current liabilities using its current assets.
1.05
FY17E
FY16E
FY15
FY14
FY13
FY12
1.00
Current Ratio
Sep 23, 2015

Exhibit 16: Working Capital Cycle
176
170
160
142
143
152
151
FY17E
180
FY16E
200
140
FY15
FY14
FY13
FY12
120
Cash conversion cycle has declined from 176 days in FY12 to 143 days
in FY15. We expect the company will maintain the same level of working
capital cycle in terms of number of days.
Working capital cycle

Exhibit 17: Debt Equity Ratio

2.5
2.0
2.0
1.7
1.6
1.8
1.7
1.5
1.5
FY17E
FY16E
FY15
FY14
FY13
FY12
1.0
JISL is in the process of 25% stake sale in food processing business,

which would help reduce overall debt burden of the company. Debt equity
multiple has also declined from 2.0x in FY12 to 1.8x in FY15.
Debt Equity Ratio

Exhibit 18: Company Snapshot (Ratings)

Low
1
High
2
Quality of Earnings
Domestic Sales
Exports
Net Debt/Equity
Working Capital Requirement

Quality of Management
Depth of Management
Promoter
Corporate Governance
33
33
33
33
33
33
33
33
33
Sep 23, 2015

Valuation & Outlook

Going forward, it is expected that the company to focus on collection of debtors, debt reduction, which in turn could lead to
favorable return ratios and a healthy balance sheet. Government initiatives like Pradhan Mantri Krishi Sinchai Yojana, extending
subsidies towards implementing MIS could provide a cushion to the companys revenue growth.
JISL historically traded at PE band of 30x-50x. At CMP Rs.60 the stock is trading at 11.8x of FY17E. We have assigned 15.0x
PE of FY17E EPS for a target price of Rs.75 per share representing an upside potential of 26% in 9-12 months.
Exhibit 19: PE Band
120
100
80
60
40
20
0
Sep-13
Nov-13
Jan-14
Mar-14
PE
May-14
Jul-14
5x
Sep-14
Nov-14
Jan-15
15x
Mar-15
May-15
30x
Jul-15
Sep-15
50x
Exhibit 20: P/BV Band

200.0
3.0
2.5
150.0
2.0
100.0
1.5
1.0
50.0
0.5
0.0
0.0
Sep-12
Jan-13
1x
May-13
1.5x
Sep-13
Jan-14
2x
May-14
2.5x
Sep-14
Jan-15
3x
May-15
Sep-15
P/BV (RHS)
We expect the JISL to restructure its debt and debtors collection period to and restructure is balance sheet. Currently, the stock
is trading at 1.3x FY15 BV, 1.2x FY16E BV and 1.1x FY17E BV. We value the stock at 1.4x FY17E BV for a target price of Rs.75
per share representing an upside potential of 26% in 9-12 months.
Key Risks
yyWithdrawal of subsidies: Withdrawal of subsidies for micro irrigation systems by Central and State Governments is a key
risk which could lead to JISLs de-growth.
yyExposed to foreign currency fluctuations: More than 45% of the revenue is from abroad. Volatility in currency may impact
export revenues as well as margins.
Sep 23, 2015

Financials
Exhibit 21: Income Statement
YE Mar (Rs. Mn)
FY13
FY14
FY15
FY16E
FY17E
Revenues
50217
58281
61579
66669
71145
Operating Expenses
42964
50582
53704
57840
61373
Growth (%)
(11.1)
6.2
2.3
12.1
10.7
Growth (%)
EBITDA
Depreciation & Amortization
2.1
7253
16.1
7700
5.7
7875
8.3
8829
6.7
9772
1696
2045
2441
2541
2691
6226
6117
5765
6739
7559
125
(860)
310
2345
3327
31
(398)
YE Mar (Rs. Mn)

Cash & Cash Equivalents
Other Income
EBIT
Interest Expenses
PBT (after exceptional item)

Tax
Adjusted PAT (After MI)

Growth (%)
668
4855
(80)
463
4676
331
4692
451
4394
478
4232
462
(239)
(703)
(998)
+ to -
- to +
197.5
41.8
FY13
FY14
FY15
FY16E
FY17E
2359
1968
3044
2770
2863
(98.6)
553
1645
2333
Exhibit 22: Balance Sheet
Sundry Debtors
Inventory
Loans & Advances

Investments
Net Block
CWIP
Miscellaneous
19547
17994
19541
21469
22339
5808
8818
7582
6926
6769
17231
38
18364
14
18566
621
19071
621
20148
621
24327
25579
25051
25036
25195
8150
8500
8868
8752
8864
749
807
526
1122
1208
Total Assets
78208
82044
83799
85768
88007
Debt (LT + ST)
34170
36866
39358
38377
37477
Current Liabilities & Provisions

Other Liabilities
Total Liabilities
Shareholders Equity
Reserves & Surplus
20393
1966
56528
1072
20608
21565
1654
60084
925
20831
21382
1660
62400
925
20474
22737
1455
62569
925
22274
23965
1486
62928
925
24154
Total Networth
21680
21755
21399
23199
25079
Total Networth & Liabilities
78208
82044
83799
85768
88007
Minority Interest
205
10
Sep 23, 2015

Exhibit 23: Cash Flow Statement
YE Mar (Rs. Mn)
FY13
FY14
FY15
FY16E
FY17E
PBT
125
(860)
310
2345
3327
4855
4676
Depreciation
1696
Tax Paid
(295)
Interest
Changes in WC
Other income and non cash item
Cash flow from operating activities

Inc/dec in capital expenditure
Inc/dec in investments
Others
Cash flow from investing activities

Inc/dec in borrowings
Issuance of equity
Dividend paid
2045
2441
(41)
(271)
(3127)
(1551)
4275
5731
1021
1461
4693
2541
4394
(561)
2691
4232
(859)
(868)
(2380)
(1381)
6613
6825
8307
307
486
296
(3000)
(3322)
(2205)
(1643)
(3000)
(773)
410
(73)
189
189
356
(1)
(10)
(3418)
(2913)
(2288)
(1454)
(2811)
3903
(586)
(469)
1216
(265)
1656
(270)
(982)
(270)
(900)
(270)
Interest paid
(4843)
(4638)
(4640)
(4394)
(4232)
Cash flow from financing activities
(1832)
(3202)
(3254)
(5646)
(5402)
Others
Net change in cash
162
(974)
485
(384)
1070
(275)
93
Exhibit 24: Key Ratios

YE Mar
FY13
FY14
FY15
FY16E
FY17E
EBITDA Margin (%)
14.4
13.2
12.8
13.2
13.7
2.5
3.3
EBIT Margin (%)
Net Profit Margin (%)
Dividend Payout ratio

Net Debt/Equity
RoE (%)
RoCE (%)
12.4
0.1
10.5
(0.7)
714.3
(57.5)
0.1
(1.8)
1.6
0.9
41.3
1.8
2.6
10.1
14.1
1.7
7.1
10.6
9.9
1.5
9.3
16.7
15.0
17.1
18.5
FY13
FY14
FY15
FY16E
FY17E
0.1
(0.9)
1.2
3.6
5.0
BV (Rs.)
47.7
47.0
46.3
50.2
54.2
P/BV (x)
1.3
1.4
1.3
1.2
1.1
17.3
1.7
9.4
Exhibit 25: Valuation Parameters

YE Mar
EPS (Rs.)
DPS (Rs.)
PE (x)
EV/EBITDA (x)
EV/Sales (x)
0.5
NA
5.5
0.8
0.5
NA
5.6
0.7
0.5
NA
0.5
16.8
5.3
0.7
Source: Company, Karvy Research; *Represents multiples for FY13, FY14 & FY15 are based on historic market price
4.7
0.6
0.5
11.8
4.1
0.6
11
Sep 23, 2015

Stock Ratings
Buy
Sell
Hold
Absolute Returns
> 15%
5-15%
<5%
Connect & Discuss More at

1800 425 8283 (Toll Free)
research@karvy.com
Live Chat
in
You
Tube
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Sep 23, 2015

Jain Irrigation Sep

Industrials - Machinery - Agricultural Machinery

Jain Irrigation Systems Ltd

India Research - Stock Broking

NBFC Led Business Model to Eliminate the Balance Sheet

JISL to bring in synergies to its MIS business:

For the customers in the

3M Avg. daily volume (mn)

52-wk High/Low (Rs.)

Face Value (Rs.)

Shareholding Pattern (%)

High entry barrier business:

Stock Performance (%)

Widespread dealer network for MIS growth:

Strong dealer network of over

In the context of dealing with Government,

dependence on Government subsidies, inherent issues of weather etc make it

Valuation and Outlook

yyExposed to foreign currency fluctuations.

Source: Bloomberg; *Index 100

Exhibit 1: Valuation Summary (Rs. Mn)

EBITDA Margin (%)

Source: Company, Karvy Research

040 - 3321 6275

Sep 23, 2015

Company Financial Snapshot (Y/E Mar)

Optg. Exp (Adj for OI)

Dividend yield (%)

Profit & Loss Ratios

Net profit margin (%)

Jain Irrigation Systems Ltd (JISL) operating in Micro Irrigation

Source: Company, Karvy Research

Cash Flow (Rs. Mn)

Balance sheet (Rs. Mn)

PBT (after exceptional item)

Net Fixed assets

Balance Sheet Ratios

Source: Company, Karvy Research

Exhibit 2: Shareholding Pattern (%)

Source: Company, Karvy Research

Exhibit 3: Revenue Segmentation (%)

Source: Company, Karvy Research

Sep 23, 2015

Financial and Operational consolidation to drive bottom line:

Focus on positive cash flow and deleveraged Balance Sheet:

Huge scope for improvement in efficient water irrigation:

Widespread dealer network for MIS growth:

Sep 23, 2015

Well diversified business model to de-risk the business

Source: Company, Karvy Research

Source: Company, Karvy Research

One-stop-shop for total Agricultural input needs:

Sep 23, 2015

Management guides a double digit growth during

Revenue Growth (%)

EBITDA Margins (%)

We kept the finance cost consistent though the

Polymers are the raw materials for piping as well

Net profit after all adjustments

EPS Growth (%)

We expect EBIT to grow at 17% and 12% on YoY

We are expecting robust cash flow from operation

Free Cash Flow