Jain Irrigation

Someone moved your water. From free, to priceless. The commodity has transformed, in a very short span of time, from its erstwhile mundane position of mass abundance to one of widespread scarcity. Sourced by anyone and used freely for any purpose till now, water is no longer a viable certainty as it impacts innumerable interests, none of whom is willing to forego the benefits. After all it’s a life and death situation. And taking advantage are the water-carriers.

Pursuing interests in this space is the Bhavarlal Hiralal Jain-promoted Jain Irrigation (Jain), India’s largest and world’s second-largest micro irrigation system (MIS) player. Powering a strong compounded annual growth rate (CAGR) of 43 per cent over FY07-09, Jain has justifiably moved from the periphery of the corporate, and stock market, arena to its centre. And what is likely to keep it there is its well-diversified profile.

Unquestionably, at its current price-to-earnings (PE) ratio of 36.86x (January 25, 2010), Jain is not cheap, but considering its fundamentals and the hugely growing importance of water for commercial use, the company deserves a look. After all, unlike oil, water cannot be replaced.

Formidable Control:

Jain has played a pioneering role in bringing the benefits of micro irrigation systems (MIS) to Indian farmers. Jain dominates the drip irrigation segment with a 55 per cent market share and in sprinkler systems it controls 35 per cent. While organic growth is on automatic, Jain has aggressively embraced inorganic growth, effecting six overseas acquisitions over the last few years. Jain’s 15 per cent global market share is beaten only by Israel’s Netafim at 20 per cent.

Jain has thereby made competition irrelevant, forcing rivals like Rungta Irrigation, EPC, and Parixit, fighting for leftovers.T