Agriculture is one of the most important sectors in the country, with plenty of space for increased consumption; the sector requires tried-and-true products like pesticides, tractors, and current irrigation systems, among other things. With the introduction of new and more effective agricultural processes and products such as biologicals, hybrid seeds, organic fertilizers and pesticides, new irrigation systems, and other impending items, there is also room for innovation.
Importance of EPS
A company's earning per share, or EPS, is its net profit, or profit after tax (PAT), divided by the total number of outstanding shares. Although dividend payout is not directly tied to earnings per share, it is usual to notice that only companies with consistently stable or growing earnings per share pay dividends to their shareholders. Though dividends are very subjective, and many factors are taken into account before a dividend is paid, investors seeking dividend income should look at the company's EPS before investing.
Analysts can use the EPS computation to undertake a fundamental examination of a company. A corporation with a greater earnings per share (EPS) is thought to be more prosperous and financially stable. Analysts use earnings per share (EPS) to assess a company's financial health. It is frequently referred to as the value of a company's bottom line.
Technical Grade Pesticides and Intermediates are manufactured by Bharat Rasayan Limited (BRL). BRL has production facilities in Rohtak, Haryana, and Dahej, Gujarat. The stock returned 92.28 percent over three years, compared to 61.01 percent for the Nifty Smallcap 100. The company's EPS is 377.02, which is high and good for investors.
Bharat Rasayan has consistently generated good financial results, with a Net Profit growth rate of 40.8 percent CAGR over the last five years. In addition, the company boasts a great ROE of 31.9 percent for the year. Cost optimization and operational efficiency have also helped it increase its operating profit margins from 6% in 2010 to 19% in 2020. Given the company's outstanding growth, it trades at a reasonable 27.5x P/E valuation.
In India, Bayer CropScience Limited manufactures, sells, and distributes insecticides, fungicides, herbicides, and other agrochemical products. The company has enough cash on hand to cover its contingent liabilities. In the fiscal year ending March 31, 2021, the company spent less than 1% of its operating revenues on interest charges and 8.5 percent on staff costs. Stock returned 21.52 percent over three years, compared to 70.22 percent for the Nifty Midcap 100.
On the financial front, the company has maintained a consistent performance, with a ROE of 19.1 percent in FY21. It has generated stable cash flows, with operational cash flows rising at a 27.24 percent CAGR from Rs. 206 crores in 2016 to Rs. 687 crores in 2021. Bayer is debt-free and has significant liquidity, having cash and cash equivalents of Rs. 1,210 crores at the end of FY21. The stock also has a P/E of 48.61x, which shows that the company is valued fairly.
The company's yearly revenue growth rate of 37.67% surpassed its three-year CAGR of 25.94%. The stock returned 335.25 percent over three years, compared to 61.69 percent for the Nifty 100. PI Industries Ltd., founded in 1946, is a Large Cap business in the Pesticides/Agro Chemicals industry with a market cap of Rs 48,608.21 crore.
The domestic business is likely to improve over the medium term, thanks to a strong product line-up, a helpful policy environment, and a regular monsoon. Following the successful Rs. 2,000 crore equity injection via QIP method in July 2020, PI Industries now has a healthy financial risk profile and liquidity.
Gujarat Narmada Valley Fertilizers & Chemicals (GNFC)
Gujarat Narmada Valley Fertilizers & Chemicals Ltd., founded in 1976, is a Small Cap business in the Fertilizers industry with a market cap of Rs 6,301.45 crore. The stock returned 11.77 percent over three years, compared to 70.22 percent for the Nifty Midcap 100. Over a three-year period, the stock returned 11.77 percent, compared to 85.52 percent for the S&P BSE Basic Materials index. The company has good EPS of 60.21.
4 Agriculture Stocks With High EPS In 2021
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Risk of investing in Agriculture Stocks
The Indian weather has been notoriously fickle in the past, with erratic rains across the country. In the event that rainfall is lower for a given year, farming activities for a specific crop or state may be reduced, resulting in a lesser need for fertilizers and pesticides for that year. Increased input costs, higher interest rates, excessive borrowing, larger cash obligations, a lack of adequate cash or credit reserves, and adverse changes in exchange rates in the case of company imports can all contribute to financial hazards.
Agriculture is one of the most important sectors in the country, with plenty of space for increased consumption; the sector requires tried-and-true products like pesticides, tractors, and current irrigation systems, among other things.
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