CMP and PE Ratio: Rs. 40.8 with a PE ratio of 4.6
Peer Companies for Aries Agro:
* Bayer CropScience Ltd trading at a PE of 19.92
* Monsanto India Ltd trading at a PE of 11.67
* Nagarjuna Agrichem Ltd trading at a PE of 4.30
* Rallis India Ltd trading at a PE of 4.13
Product offering of Aries Agro:
* Plant Nutrition Products
* Seed and Plant Protection Products
* Farm Equipments
Growth Driver for the Pesticides/Agro Chemicals industry:
Some other numbers and statistics which indicate a bright future for the Pesticide and Agro chemical industry are:
* Micronutrients consumption level in India is one of the lowest in the world. With increased stress on agriculture expected in the future companies such as Aries agro will benefit.
* 60% of the Indian micronutrients industry is unorganized and highly fragmented. This can be a threat also but its more of an opportunity for organized players to grow and consolidate the industry.
Financial Analysis:
* Aries agro has shown good revenue growth over the past few years and sales has increased from Rs. 26 crores in FY 04 to Rs. 103 crores in FY 08. The FY 08 EPS for the company stood at Rs. 13.1.
* The company has not been able to generate positive operating cash flows in the last two years. This is a matter of some concern, as negative operating cash flow would typically mean that the company would have to fund its day to day operations with internal accruals or debt.
* The company had come out with a IPO sometime back and has expanded its equity base. The funds from the IPO will help the company fund its expansion plans and can be also used for its working capital requirements. The company is not highly leveraged, which is a good thing for any company.
Key Business Strengths for Aries Agro:
Aries Agro is listed in a space where there are already many players in the market with some really good players. Some of the key business strengths for Aries agro is as follows:
* Aries has a very strong distribution network and claims to place a new product in 69,000 retail shelves within 1 day of its launch. A very good network is more then essential in this industry and this gives Aries a competitive advantage.
* Aries is also steadily increasing its international reach. The company has already appointed distributors in UAE, Nepal and Bangladesh. The company has also made investment in Golden Harvest Middle East FZC, Sharjah - now an Aries subsidiary.
* Aries agro also has customized variants of products based on ongoing research of soil, crop and geography specific nutrient needs. This will make its products more acceptable in different regions or geographies for which it is specially made
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