Jain Irrigation Systems Ltd (JISL) had reported Q1 earnings this FY that were muted compared to previous performance. GST destocking played spoiler for the company say analysts, with net sales increasing by just 1.3% YoY, while EBITDA and PAT declined by 1.4% and 4.1% compared to the same quarter last year. Revenue from the MIS domestic business, and the plastics division shrunk by 6.4% and 4.8% respectively due to dealers reducing inventory ahead of GST.
Typically, the company said, Q2 is the soft quarter for Jain Irrigation. This year however, demand has shifted to Q2 due to the GST impact, and is set to compensate - analysts consequently expect a bumper Q2 where the numbers will look particularly strong compared to the previous year's quarter.
Jain Irrigation has a strong moat in micro-irrigation solutions, and the government focus here is expected to drive growth in the coming quarter. A strong monsoon which has become a deluge in many parts of India is expected to be positive for farm growth, driving the firm's hitech agri input products, as farmers up purchases. Exports to Africa have kept hitech agri inputs upbeat, with a growth of 12% in Q1 YoY, and exports are emerging as a significant part of sales across divisions: in Q1 exports grew 102% YoY. Karvy and Religare have issued recent buy calls with double digit upsides, considering Jain Irrigation's muted share price post Q1 results.