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Overweight on Jain Irrigation – Morgan Stanley

April 23, 2008

Micro Irrigation (MIS) growth continues to remain robust driven by strong demand and its current under-penetration as a percentage of total irrigated area in India. With central government focus on improving agriculture productivity, increasing number of state government driving MIS programs and geographical expansion by Jain Irrigation – JISL.

Jain irrigation had a good Q4 for FY08. JISL is well positioned as industry leader in MIS business and could benefit from high growth potential AP business in the long term. Expect the growth to remain strong and with estimated margin expansion over the next 2-3 years, earnings growth to lead revenue growth.

DalalStreet.Biz comment:
The stock appears to be little expensive at Rs 653 27x FY09 earnings. However MS has set a target price of Rs 789. Existing investors can hold and fresh postions maybe considered on correction.

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