The document discusses three agro-based companies - Bayer CropScience, PI Industries, and Rallis India. It analyzes their financial performance over several years using metrics like EPS, reserves, enterprise value, book value per share, and sales. Bayer CropScience shows the highest growth across most metrics, with EPS increasing at a 24.1% CAGR and book value per share rising 25.4% annually. All three companies retain a high percentage of profits each year to reinvest in growth. The document concludes Bayer CropScience has the strongest growth prospects and financials to justify its higher price-to-earnings ratio, making it the most recommended stock for investors.
The document discusses three agro-based companies - Bayer CropScience, PI Industries, and Rallis India. It analyzes their financial performance over several years using metrics like EPS, reserves, enterprise value, book value per share, and sales. Bayer CropScience shows the highest growth across most metrics, with EPS increasing at a 24.1% CAGR and book value per share rising 25.4% annually. All three companies retain a high percentage of profits each year to reinvest in growth. The document concludes Bayer CropScience has the strongest growth prospects and financials to justify its higher price-to-earnings ratio, making it the most recommended stock for investors.
The document discusses three agro-based companies - Bayer CropScience, PI Industries, and Rallis India. It analyzes their financial performance over several years using metrics like EPS, reserves, enterprise value, book value per share, and sales. Bayer CropScience shows the highest growth across most metrics, with EPS increasing at a 24.1% CAGR and book value per share rising 25.4% annually. All three companies retain a high percentage of profits each year to reinvest in growth. The document concludes Bayer CropScience has the strongest growth prospects and financials to justify its higher price-to-earnings ratio, making it the most recommended stock for investors.
PI Industries Ltd Rallis India Ltd Bayer CropSciences Ltd
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Why should an investor see/ not see growth potential in you?
Bayers Crop Science FY2012 FY2013 FY2014 FY2015 FY2016 CAGR The EPS of Bayer is EPS 35.19 294.11 75.14 104.59 83.41 24.1% increasing at a CAGR Earnings Retention Ratio 88.06 98.31 93.06 79.93 80.03 -2.4%of 24.1% which shows Reserves 753.20 1,891.80 1,705.70 1,996.30 1,720.50 22.9% good returns from Enterprise value 2,739.78 3,785.45 5,029.97 11,042.94 12,578.00 46.4% investors point of Book Value/ Share 200.68 488.94 476.04 555.44 496.02 25.4% view. Further it is Net Sales 2,204.40 2,626.00 3,146.20 3,615.30 3,644.10 13.4% maximum among the ROE 17.53 60.15 16.61 18.84 17.13 -0.6% three companies. Bayer CropScience is also commanding a very high enterprise value which shows it has high future prospects but at the same time for an investor it also means that the company is overvalued. But if that value of the company is justified by other financial parameters then the investor can consider investing in the company. Book value per share of Bayer CropScience is also increasing at a CAGR of 25.4% over the years which is maximum among the three companies. PI Industries FY12 FY13 FY14 FY15 FY16 Net Sales increase CAGR EPS 40.27 7.57 13.52 17.84 over the years also 22.9 -13.16% Earnings Retention Ratio 87.55 85.95 85.19 85.97 86.44 -0.32% give positive growth Reserves 306.68 511.05 669.47 868.87 1142.09 38.92% indication to the Enterprise Value 1557.63 1925.73 3835.46 8370.91 7861.67 49.89% investors and all the BVPS 126.72 192.97 50.05 64.62 84.29 -9.69% three companies are Sales 874.97 1147.56 1586.29 1936.37 2075.94 24.11% performing good in ROE 31.67 18.42 26.96 27.56 27.11 -3.81% this regard. Return on Equity gives the equity owners an indication on how much returns the company is earning on their equity investment. All the three companies are performing well in this regard and are earning god returns for their equity shareholders. Rallis India FY12 FY13 FY14 FY15 FY16 One thing common in CAGR EPS 5.21 6.14 7.53 7.48 all the companies is 6.48 5.60% Earnings Retention Ratio 57.81 62.54 68.12 66.57 61.43 1.53% that all the companies Reserves 534.2 602.04 693.8 778.51 846.01 12.18% are not giving much Enterprise Value 2464.65 2227.21 3392.76 4458 3321.25 7.74% dividend and are BVPS 28.47 31.96 36.68 41.03 44.5 11.81% retaining most of the Sales 874.97 1147.56 1586.29 1936.37 2075.94 24.11% profits. Thus they are ROE 18.31 19.2 20.52 18.22 14.56 -5.57% ploughing back their profits and have accumulated huge reserves and surplus. This shows huge growth potential from the investors point of view as the companies have huge reserves which they can invest in profitable ventures. Bayer CropScience is leading in this regard with maximum reserves followed by PI Industries and then by rallis India Ltd. Bayer CropScience has acquired Seedworks (Hyderabad) in 2015-16 which is expected to strengthen its vegetable seed business in India and will also provide good opportunity to gain market share. It has also bought AgraQuest, supplier of biological pest management solutions for 425$ million. PI Industries is also investing a lot in R&D and is launching a new product Legacee in Kharif 2016. These factors further enhance investors sentiments as they see it as future growth prospects for the company. Price Earnings (P/E) ratio shows how much price the company is commanding in the market per rupee of earnings. If it is higher it shows that markets have high regards for the company and it has potential to Page | 2 command such higher price, On the other hand lower P/E ratio means the company can’t command higher price due to gloomy future prospects. However, from investors perspective they might see a company with higher P/E ratio as an overvalued company. Bayer CropScience is having P/E of 44.61, PI Industries is having P/E of 32 and Rallis India Ltd is having P/E of 15.48. The industry average P/E ratio of 35.43. thus from investors point of view we can say that Bayer CropScience is overvalued and rallis India is undervalued. But other parameters justify the higher P/E ratio of Bayer CropScience and hence it is the most recommended company followed by PI Industries.