IndiaMidcaps

FLASHNOTE

JAINIRRIGATION
FLASH

Toundertakefundraisingexercise
IndiaEquityResearch|Miscellaneous

JISL expects annualised savings on interest to be in the INR8001,000mn range, resulting in better bottom line and gearing (current D/E at 2.2x). However, this will lead to equity dilution of 12.6% (w/o considering FCCB conversion) and 17.3% (with FCCBconversion).JISLstatedthatthisfundraisingwillprovidecrucialsupportduring thecurrentphaseofbusinessmodelchange.Italsoaddedthatreceiptofgovernment subsidies has gained momentum and the company expects to have significantly improvedpositioninremainingpartofFY13.MaintainBUY.
Financials(Consolidated)* YeartoMarch

JainIrrigation(JISL)hasannouncedfundraisingof~USD200mnviaamix of equity, FCCBs, and ECBs. The company expects to complete the exercisewithin60dayspostapproval,withIFCcontributingasignificant chunk of FCCBs. The fund raising will lead to deleveraging of balance sheet and reduction in interest cost by ~INR8001,000mn; however, it willalsoresultinequitydilutionof~17.3%.MaintainBUY.
Event:JISLhasannouncedfundraisingofapproximatelyUSD200mnbywayof: 50.63mn equity shares on preferential issue for an amount of USD73mn (INR4,050mn)atINR80/shareorSEBIprice,whicheverishigher. FCCBofUSD55mn(INR3,055mn).Broadtermsofconvertiblebondare: ConversionpricewillbeINR115/shareduringtheperiodoffiveyears. FCCBwillcarryacouponof3%p.a.andYTMof6%. FCCBswillberepaidinonetrancheafterfiveyears,ifnotalreadyconverted.

EDELWEISSRATINGS AbsoluteRating InvestmentCharacteristics BUY Growth

MARKETDATA(R:JAIR.BO,B:JIIN) CMP TargetPrice 52weekrange(INR) Shareinissue(mn) Mcap(INRbn/USDmn) : INR64 : INR97 : 183/60 : 385.9 : 25/446

Avg.DailyVol.BSE/NSE(000) : 3,365.8 SHAREHOLDINGPATTERN(%) Current Promoters% MF's,FI's& BK FII's others 31.0 0.7 50.5 17.8
:

Q4FY12 Q3FY12 30.4 1.0 53.0 15.7 30.4 1.0 55.4 13.3
15.2%

LIBORlinkedECBuptoanamountofUSD75mn(INR4,165mn)withatenorof6 10years.

Issue of 7.5mn warrants (1.85% of current O/S shares) to promoters of JISL @ INR86.5/share(averageof26weeks). InternationalFinanceCorporation(IFC)iscontributingsignificantlytotheFCCBs,apart from participating in equity/ECB. Part of equity funds are being raised from private equity firm Mount Kellett; ECBs will come from a combination of European Global DevelopmentFinancialInstitutionsandRaboBank.

*Promoterspledgedshares (%ofshareinissue)

PRICEPERFORMANCE(%) BSEMidcap Index 1month 3months 12months (1.3) 2.9 (5.7) Stock (19.5) (9.2) (60.3) Stockover Index (18.3) (12.1) (54.6)

Impact:Positiveforbalancesheet,thoughwithequitydilution

Netrevenues(INRmn) Revenuegrowth(%) EBITDA(INRmn) Adj.profit(INRmn) DilutedEPS(INR) P/E(x) ROAE(%)

FY11 41,634 21.7 7,585 2,625 6.5 12.2 19.2

FY12E 49,329 18.5 9,330 3,045 7.5 10.5 18.8

FY13E 53,478 8.4 9,772 3,111 7.7 10.3 16.2

FY14E 61,193 14.4 10,760 3,778 9.3 8.5 16.5

ManojBahety,CFA
+912266233362 manoj.bahety@edelcap.com

VarunGuntupalli
+912266233481 varun.guntupalli@edelcap.com

*Predilutivebasis
EdelweissResearchisalsoavailableonwww.edelresearch.com, BloombergEDEL<GO>,ThomsonFirstCall,ReutersandFactset.

September5,2012 EdelweissSecuritiesLimited

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