Bayer Cropscience - Value Pick - Anand Rathi

"Bayer is the largest player in the Indian crop protection market"

Strong Parentage

The company is the Indian subsidiary of Bayer Germany which is a diversified international chemical and healthcare company. Promoter holding is 71% for June 2012.

Well known brand across the categories of its segment

The company has the widest rage of high quality of patented products.

Strong pipeline ahead

Insecticides - 1] Betacyfluthrin 9% + Imidacloprid 21% OD (Solomon 300 OD) for control of fruit and shoot borers and sucking pests in Okra and Brinjal,

2] Fipronil + Imidacloprid 80 WG (Lesenta 80 WG) for use in Sugarcane against white grubs besides securing key label extensions in Crop Protection and

3] Imidacloprid 0.5% GR (Quickbayt) for control of Housefly in Environmental Science business.

Expected Value 1130 Nifty Level 5415

Strong financials - Consistent performance

Top line has seen a CAGR growth of 27.7% and a bottom line growth of 30% for last 5 years. The company is almost a zero debt company. Last 4 years company has been successful in maintaining ROCE's of more than 20%.

Unlocking of Value

The Thane land deal has been a trigger for huge cash on books. Partial amount of Rs. 260 crs was already received and the balance amount of ~Rs. 700crs is receivable by Sep2012 end.

Attractive Valuations

On valuations front the company is trading below its 5 years averages of PE multiples and EV/EBITDA of 19.7x and 11.17x respectively.

Source : Equity Bulls

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