Jayant Agro-Organics Limited.

NSE Code: JAYAGROGN BSE Code: 524330

ISIN INE785A01026 Market Cap (Rs. Cr) 220

The company is a leader in the castor oil & derivatives market in India. Castor oil and its derivatives are unique in the sense that they can replace crude oil in the chemicals industry. It is thus an ecological and proven alternative to Green House Gas (GHG) emitting petroleum products that are being manufactured on an industrial scale today.

India is responsible for producing 75-80% of the world's total castor seed output, providing a competitive advantage for companies based in the country. According to the Solvent Extractors Association of India, Jayant Agro-Organics has been the largest processor and exporter of castor seeds in India since 2004. Environmental concerns and new regulations, such as the EU Regulation REACH, which aims to enhance the protection of human health and the environment from chemical risks, are driving the demand for castor-based alternatives to traditional petrochemical products. Low molecular weight phthalates, used as plasticizers to increase flexibility, transparency, durability, and longevity in plastics, are derived from crude oil, easily leach out of products, and are carcinogenic, potentially causing birth defects. High molecular weight phthalates derived from castor oil are the ideal replacements. They are superior, being renewable, biodegradable, and eco-friendly.

EU and other developed nations are restricting the use of hazardous chemicals in products, prompting businesses to develop REACH-compliant products. Ford began manufacturing all car dashboards using castor oil derivatives starting in 2012. NIKE also launched its lightest-ever football shoes, worn by Brazilian football star Neymar, using castor oil derivatives in 2012.

Castor oil is remarkably versatile, with a vast and varied range of end products. It is utilized in high-performance lubricants for jet engines and racing cars, adhesives for electronic PCBs, high-performance plastics in electronic devices like cell phones and laptops, and food-grade plastics for medical supplies and equipment. Further applications include high-performance plastics that withstand extreme corrosion, such as auto fuel parts and deep-sea drilling corrosion-resistant pipes, underground fiber optic cables, zero VOC (volatile organic compounds) paints, inks, chocolates, ice creams, lipsticks, deodorants, perfumes, chemicals in diapers to prevent diaper rash, non-toxic crayons, and non-toxic plastic toys and pens.

Jayant Agro-Organics is a government-recognized Star Trading House and a government-recognized Department of Science & Technology research-oriented company. The promoters of Jayant Agro-Organics hold a US patent for the efficient production of the castor oil derivative sebacic acid and its salts (US Patent No: 6392074). The promoters own a 65% stake in Jayant Agro and have been increasing their stake through creeping acquisition in the open market since 2012.

The company has been distributing dividends since its inception, with dividends increasing to over Rs 2 per share after commencing the production of sebacic acid, the second-generation castor oil derivative and the most widely used castor oil derivative globally.

Recently, Arkema, a French specialty chemicals company with a turnover of 6.5 billion euros and the largest castor oil consumer in the world, acquired a 25% stake in Ihsedu Agrochem to ensure a steady supply of castor oil and its derivatives for its specialty chemicals business. The 25% stake in Ihsedu was purchased for Rs 30 crore, valuing Jayant Agro-Organics' 75% stake at Rs 90 crore. Mitsui Chemical and ITOH OIL of Japan have also entered into a joint venture (50% Jayant Agro-Organics, 40% Mitsui Chemical, 10% ITOH OIL) to produce castor oil-based polyols in India. Mitsui Chemical is the largest supplier of automotive parts to Japanese and Asian auto companies, and with this joint venture, they expect the cost of castor oil-based polyols to compete with crude oil-based polyols.

Given Jayant Agro-Organics Limited's leadership position in the castor oil and derivatives market, its high promoter holding, and low valuation, the stock at Rs 140 is an investment worth considering. The company has low debt, pays a steady dividend, and its unique products are virtually assured of growing global demand. One significant risk is long-term stable to low oil prices, which may delay the shift to castor-based alternatives in poorer and developing economies. Nonetheless, demand growth from the EU and US is likely to bode well for the future prospects of the castor oil industry and for Jayant Agro-Organics Limited.

Greenassets.in assigns this investment a risk rating of 4 - HIGH RISK. Loss of capital is possible with equity ownership. Detailed analysis and monitoring is key to managing risks successfully.

With a focus on eco friendly, bio degradble products providing a substitute to GHG emitting petroloem based alternatives Jayany Agro-Organics deserves and E-Score of 10/10.

Being an international supplier with a fast expanding global presences, Non-toxic products containing Castor based derivatives produced by Jayant Agro-Organics reach millions of people across the Americas', Africa, Europe & Asia. The Social Impact of this investment is thus maximum, deserving a score of 10/10.

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