JAIN IRRIGATION - BUY

 

                  

 

While analysing EPC Industrie ,we have discussed about the potential and road blocks of micro irrigation industry in India in detail.Till now this industry is mainly driven by subsidy provided by governments and the delay in releasing subsidy by various states eroded the financial position  of companies operating in this sector.From last year onwards companies are taking efforts to change the business model  to reduce high receivable days and improve cash collection and now they are not  taking the responsibility of subsidy collection .This shift in business model partially affected the growth during this transformation phase.But ,on the other side ,potential is very vast in a water scarce country like India where a lion share of farm land  is still irrigated through flooded irrigation method.New farming techniques like precision farming also increasing the potential of MIS.Jain Irrigation is the second largest micro irrigation company in the world which is operating in other parts through various subsidiaries .Other than MIS ,Jain having presence in other sectors like plastic and food processing .Repeating drought like situation in India forcing governments to allocate more funds for irrigation and Jain is one of the major beneficiary .Recently Maharashtra Government decided  to make drip irrigation mandatory for sugarcane in next three to five years ( Read news HERE) . I believe many states and many crops will be forced to follow this in coming years .  In my opinion ,in another few years MIS will change to a necessity from a subsidy driven business due to changing climate and changing farming techniques.Revival in US economy is also positive for the company  where the company having larger presence.Company is now taking every efforts to clean its balance sheet .This management have enough experience and expertise in handling such situations and they proved the same even in the  past .They bring back the company from near collapse ( from first half of 1990's) to the position of world leader in 10 year.Promoters are one of the very few business houses showing higher level of business ethics in Indian Corporate world too. I believe , the worst will be over for Jain Irrigation in another few quarters and most of the negatives are already reflecting in its current market price.Recommending a buy in SIP mode for long term investors from CMP of Rs.57

Related Readings

1) Jain Irrigation Systems: Learning from mistakes

2) Strawberry fields: Bhavarlal Jain formulating strategies to sustain Jain Irrigation for 100 years

Link to Company Website HERE

Links to its Subsidiaries  

1)  NaanDan Jain Israel

2) Jain Irrigation Inc USA 

3) Jain Sulama Turkey

4) Sleaford Quality Foods USA

5) Nucedar Mills Inc USA

6) Cascade Specialties Inc USA

Disc: I have vested interest in JIS