Saturday, April 10, 2010

RUNGTA IRRIGATION Ltd. - In a Space with Huge Potential.

About the Industry 

Micro irrigation technology is rapidly expanding all
over the world especially in the water scarce areas
of developing  countries.This system is best utilized
in India and China but still there is ample market
potential with changing trend in agriculture. 
Water scarcity is the most important driving
factor of the Micro Irrigation Systems (MIS)industry
in India. Along with this ,the area available for
crop production,growing population in the country
and GDP of the agriculture sector also contributes
to the growing demand for MIS.
The water use efficiency under conventional  method 
of irrigation, which is predominantly practiced in
Indian agriculture, is very low due to substantial
conveyance and distribution losses. Recognizing the
fast decline of irrigation water potential and
increasing demand for water from different
sectors, a number of demand management strategies
and programmes have been introduced to save water
and increase the existing water use efficiency in
Indian agriculture. One such method 
introduced relatively recently in Indian
agriculture is micro-irrigation, which includes
both drip and sprinkler method of irrigation.
Micro-irrigation is proved to be an efficient method
in saving water and increasing water use efficiency as
compared to the conventional surface
method of irrigation, where water use efficiency 
is only about 30 percent. Micro-irrigation is also
found to be reducing energy (electricity) requirement,
weed problems,soil erosion and cost of cultivation. 
Investment in microirrigation also appears to be
economically viable .Despite this, as of today, the coverage
of drip (2.13 percent) and sprinkler (3.30 percent) method
of irrigation is very meager to its total potential, which is 
estimated to be 21.01 million hectares fordrip and 50.22 million
hectares of sprinkler irrigation method.

About the Company
There are mainly three listed players in this space, 
There is also some other small players like Sturdy 
Industries,Tulsi Extrusion ..etc.But these two can be
avoided - first one due to lack of quality of
management and Tulsi Extr.due to the small share 
of micro irrigation products to its total turnover.
There is no justification for comparing an elephant
with an ant ,so no question of comparing 
Jain Irrigation and  Rungta.Incorporated
in 1986, Rungta Irrigation Ltd
is engaged in manufacturing, designing, assembling
and marketing of Micro irrigation systems 
(including sprinkler and drip irrigation systems). 
Rungta’s Manufacturing units located in the Sirmour
district of Himachal Pradesh,Ghaziabad in 
Uttar Pradesh, and in the Yanam district
within the Union Territory of Pondicherry with 
combined installed capacities of 4,500 MTPA HDPE
pipes, 200,000 HDPE pipes with couplers, 
5,000 MTPA rigid PVC pipes and profiles, 
750 MTPA linear low density polyethylene tubes,
and 350,000 aluminum pipes with couplers.The company
is focused on PVC Pipes as well as its core product
Sprinkler Irrigation System and Drip Irrigation
System to the retail segment, were margins
are high.It is expected  that recovery  in economy
and thrust of  the  government in agriculture area
will together result in ample business opportunities
for the  company.

Recent Developments
Rungta Irrigation Ltd has at its meeting
held on January 12,2010 has allotted 20,50,000
equity shares of Rs. 10/-each at a premium
of Rs. 25/-each against the conversion of 20,50,000
convertible warrants.Samara Realty Pvt.Ltd got
9,50,000 shares and Pleasure Investment Pvt.Ltd to
allotted 11,00,000 Number of shares. Moreover
the main promoter of the company Mr M P Rungta is
consolidating his holdings through off market
transactions within the promoter group itself.
Such activities can be taken as a  proof of the
management’s confidence in the growth potential
of the company’s business.

For the last FY, the company has reported a sales income of Rs. 35 crore and net profit of Rs. 63 lakhs. For the nine month ended Dec.2009 company already  posted a NP of 77 lakhs and expected to post more than 1 crore in this full year. At present the results are not encouraging but the notable point is that ,for the last three years company’s NP is growing steadily. Considering the immense thrust of the government in agriculture sector and huge potential for  the company’s products along with increasing promoter/big share holders commitment, we can expect a bright future for Rungta Irrigation. Currently it is trading at Rs.58/-


  1. Are you an operator by any chance!

  2. I think ,volume of most of the scrips i have mentioned earlier itself is an answer for your question.

  3. Sir,
    I am new to your blog. Some questions occurred to me while going through your blog. Will you be kind enough to answer to some those as given below?
    1. Is it possible to give expected time period of holding the stock given by you or any price target. As you said in case of Rungta that the future is bright. Now, if anybody enters into it, what should his price/time target be?
    2. If you are asked which, among the many stocks discussed in your blog, is best scrip to bank on right now, what will your answer be?
    3. Which stock qualifies for SIPing?

    Thanking you in advance

  4. I am not a believer in technical analysis to fix targets. I strongly believe that in long term ,share price is a reflection of company's growth .Hence ,time of holding period is till the growth ends. Through my blog I am just trying to throw some light to some of the not well known scrips.Regarding SIP , Truly speaking none of the stocks are intended for SIP.If u like SIP mode it is better to try with Index based mutual funds or large cos.

  5. Thanks for reply and sir,
    Which one, you think, is the best pick among the scrips discussed by you? As my fund is limited, I need your suggestion.

  6. hi please tell me about avon organics, simran farms, century ectrusion....these are the script i took by analysing thr results want to know your views....

  7. Dear Vv

    Without knowing your risk appetite,fund availability..etc,it is very difficult to suggest.I think I have posted only good scrips ,but which is the best to each investor is depends on everyone character.If u need any more details about any of the posted scrips pls feel free to mail.

  8. Dear Sanket
    I am tracking only Simran ,which I feel as a good BUY .But keep an eye on the price of maize.Any rise in its price may negatively affect the company since its major cost is the cost of feed.

  9. Hi Valuepick,

    Your simply gr8 buddy......Your greatness can be simply justified by the selfless service you have been doing towards Investor Community by guiding us.I really admire the way you have been coming up with value multibaggers.

    I have one quick question regarding 'Money Matters Financial Services and SE Investments' ?

  10. Dear Vikas

    It is very difficult to analyze companies from financial service sector,mainly because promoters of most of the unknown fin.companies are playing in the market a lot and the balance sheets are fabricated.SE investment is a reasonably good play especially because of mkt fancy towards micro finance sector and its current perfomance.Since there is not much micro fin cos in listed space now ,it is getting much attention .But some well known cos are expected to come out with IPO in near future from this sector which may cause for diverting interest to that well known cos and SE's valuation may affected .

  11. Hi,

    What is your view about Sturdy Industries Ltd?
    Is it worth investing and holding for long time?


  12. Buy Money matters financial services bse code 531595 even at 500+.It is unique play i PE investment.Low floating of stocks plus good result with NP of over 125 crores make it good bet for long term.My long term projection is 2500.Yes it is another Oracle finance in making for sure.Just grab it.

  13. Money Matters(531595@539/= as on 04.06.2010)can become a big big multibagger......

    Needless to say that you would like it and a candidate for a BIG MULTIPLIER for the following

    - 10rs paid up
    - promoter holding 69.04%
    - corp holding 30%,
    - Performance consistent for the last 4 Qtrs after new management take over
    - Sector that gets high PE during the bull phase.
    - Available at low PE for annualized EPS 45+
    - Interim dividend likely (first time i think its planning for dividend)
    - Finally there client list.. this is where i fell in love with this counter.

    - free float is low and hence buying and selling needs patience

    I missed to mention that they are attracting talents for banks and other NBFC's. Have a feeling that they are in for some thing very very big.

  14. This looks very weak in terms of financial....and looks no where closer to Jain Irrigation in terms of any parameters.Looking at the sector potenial this company as shown no growth in either Topline or Bottom line.
    Please provide me with your valueable suugestion.......i might be missing something which you might have observed.

  15. I strengthens your developments. The world as we live in today, we must save every drop, and as you develop only contribute to that!




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