Saturday, July 3, 2010


Different ‘themes’ catching up in any stock market time to time,
and company’s from such sectors giving many fold returns in
short period. In India ,earlier it was IT, then Real Estate
(based on land bank stories), again Power, Education,
Bio technology …etc. A common feature in all these times are
,lot of companies changing their name to add such hot ‘tags ‘ along
with their name to lure retail investors in order to rig the  price
easily  and then offload their own shares to public at higher rate
and make money. Most of these chameleon companies may not
have any relation with such new ‘themes’ other than its names .
So even if that theme really works ,price of  such name changed
companies will not  sustain at higher level when people realize
the facts. What I mean is  , don’t buy a stock  only because
of its name but do  some basic  home work to ensure that the
particular company have at least some operations in such high
potential ‘theme’ sectors.                
          Considering the thrust of government ,changing lifestyle
and disposable income level - ‘Agriculture’,  to more specific
‘Farming’ is considered as the next big theme in India.
All allied businesses of farming are expected to get re-rated
in future which include Micro Irrigation , Seeds,
Agrochemicals, Bio fertilizer, Pesticides, Micro nutrients etc.
(Since the prices of most of the fertilizers other than Bio
fertilizers are  under govt control in India  , this sector may
not out perform) .In the first leg , till farming developed in   a
corporate level and production of such agri products improve
substantially  ,companies processing these agri products
without proper backward integration may face stiff margin
pressure. In order to avoid such a contraction  in
margins , food processing companies should go for
farming and produce - what they need.

              Unfortunately most of our listed players with ‘AGRO’
tag are merely processors of agri products after procuring the
same from farmers. So when we look into investment
opportunities in agri related company’s  ,we should clearly
distinguish  whether the company is in farming and  related
sector or only in agri processing sector. If it is in agri
processing sector only , it may enjoy a valuation which is
available for food processing sector now and not get a
premium as in the case of  farming may get in future. Needless to
say ,JAIN IRRIGATION is the undisputed beneficiary 
( by all means ) of improved activity in farming related sectors
 and it is difficult to imagine another company in near future in
its place due to its top class management , aggressive and
 inorganic growth plans , and integrated status. We have
already discussed some other companies like Aries agro ,
Rungta Irrigation ..etc in past  and expected to bring few
more companies to your attention in coming weeks.
So before catching anything with ‘AGRO’ tag –Think twice                        


  1. Excellent post buddy.......with great insight in stock selection.
    But don't you think Jain Irrigation is trading on a little expensive side currently ?
    But also looking at Rungta Irrigation....the management looks pretty lack lusture


  2. Dear Vikas

    I have a different opinion on Jain irrigation.I believes that Jain irrigation will be words largest micro irrigation company in three years.(currently it is second one).Since stock market always paying upfront valuation , I think it is not too expensive even at current level ,considering various factors.

  3. Dear value pick sir,

    whats your opinion on sturdy industry as compared to rungta ?.

    your views highly appreciated :)

    Thank you

  4. Dear Mahesh

    I have no faith in the management of sturdy industries ,unnecessary face value split itself is a bad sign.Out of 9 cases in 10 promoter intention in such cases is only creating liquidity and offload their own stock after making it a penny stock.Otherwise they will not get sufficient liquidity to offload huge quantity.Secondly this company's merger proposal of some private cos with itself dismissed by Himachal high court with a fine of RS.50000/- ,with a comment that the company even tried to mislead the court.So I think the management is horrible and I am not interested in it.

  5. Dear Valuepick sir,

    WONDERFULL Reply, DAM liked it :). I learned one more lesson : "only creating liquidity and offload their own stock after making it a penny stock.Otherwise they will not get sufficient liquidity to offload huge quantity".

    I didn't knew about strategy behind split, only i knew that the splitting happens because management if sure of future growth, BUT your comments made be Cautious look @ spited company.

    Thanks once again for your timely reply :).

  6. Dear Mahesh

    Need not consider all splitted cos alike,What I mean is unnecessary splits .If any cos rate is very high and volume is very less ,there is some justification . But if the split result it to comedown below 10 ,20 or so ,we must be cautious

  7. Dear Valuepick sir,

    Yes, recently Hind Dorr splited stock which is meaning full as growth is more in their sector, South Indian bank, MMTC for them make clear sense.

    Thank you so much for really awesome educating frm ur rich experience in an easily understandable manner :).

    increasingly I am feeling more fundamentalist ;) because of your post's :).

    Thanks once again. :)

  8. Hi Valuepick,

    What is your take on Finolex Industries.......they are also into micro Irrigation ?

  9. Hi Vikas
    Only negligible contribution to the total income ,so difficult to accept as a micro irrigation player at present.

  10. Dear Value Pick ,

    What about Gujarat Ambuja Exports?

  11. Dear Vikrant
    Guj amb exp is only an agro processor and may face margin pressure in future

  12. has anyone looked at Excel inds and UNited Phosphorous?

    They both expceted to do very good and potential multibaggers.

    With good rainfall it will reap good as they always run well with good monsoon.

  13. i support the view on excel and United Phos.
    Both are very good companies and seems like a potential multibaggers

  14. very good sharing , is there any value in SABERO ORGANIC ? please throw some light on sabero organic.

  15. Dear Sir,

    Price has been corrected on 5-6% on 16.03.2012 due to budget. Should I invest in this company at this time for 1 year time.




Tweet TopOfBlogs