Prime Stock recommendation: A promising play on food security
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20 thoughts on “<strong>Prime Stock recommendation: A promising play on food security</strong>”
1. Bayer not bringing its Pharma and consumer health products to India. When i was in USA, There are many OTC Bayer tablets ( health supplements / Vitamin enrichers / others). What could be the reason India is missing those innovative products.
2. Since BCSL is not having any research in India, are they not willing to expand in India?
Cropscience has always been a different entity from Pharma even globally. This call is a bet on crop science
Thanks for the excellent analytical study and your quick response to investors’ view points.
I am sure you will be tracking this stock and share your update for prospective investees in this scrip.
Yes I will. I own it in my long term portfolio too. 🙂
Aarati holding it does give more confidence in adding it to our portfolios 🙂
Haha. Do note that I’ve made a lot of portfolio mistakes. But do try to give only high conviction recos here!
Hi Aarti,
thanks again for excellent summary , analysis and sharing you have skin in the game. We have BN+ pop, lowest yield, small land ownership, and now even warmer / unoredictable weather… ( keeping govt regulation friendly) . Thus i am keen to hear your views on owning 2 stocks – crop protection ( convinced with your analysis Bayer, whilst they also grow crop seed size is relatively small) and another stock you have studied or think might be worth looking into in Crop seed focused ( especially for india market, has large portfolio, less imported preferably ) . To your point we have ONLY used crop seeds in cotton, with regards to food products long way to go. Thus keen to hear your views
There are a few options like Kaveri Seed that are pure seed plays, but do not prefer them on account of high volatility and past governance concerns.
can you give comparison with UPL for products and geography specifically? I thought that has better product profile and more diverse geo profile.
As an export oriented player, UPL’s model is completely different from Bayers. UPLs growth and profit metrics hinge on its ability to manufacture generics at low cost and constantly expand into new mkts or products through registration etc. This strategy delivers high but lumpy growth and comes with volatile margins. The stock may still be a decent bet at current valuations but comparing it to Bayer would be apples to oranges. The same distinction exists between domestically focussed branded players in Indian Pharma and API, CRAMs, generics exporters. The drivers are wholly different.
Hi
Thanks for the detailed analysis about the stock.
As i am a practicing clinician i can share my view point.
Insecticide and herbicide suicidal poisoning remains most common mode of suicide among the rural population.
There is growing demand in medical community to find an alternative to these agents and as well as government and health ministry of tamilnadu is well aware of this problem. Recently they have banned rat killer paste in view of many suicidal ingestions leading to liver failure. But since insecticide and herbicide are vital for crop yield they are hesistant to ban outright. But i can see in future they will pivot at some point. Govt of TN has also come up with recent organic farming guidelines.So overall it looks like a sun setting industry. I may be completely wrong but this is my impression with my medical background
Thank you for your practical inputs. It is absolutely true that pesticide residue is a serious issue and we need to move towards more judicious use. But the problem with organic methods such as neem extracts for instance is that it is hard to produce them at a large enough scale and they are not as effective at killing pests quickly as the synthetic chemical formulations. To draw a parallel, antibiotics or allopathic drugs are seen as far more efficacious and quick to deliver results than herbal remedies. In my view India or any other country would find it very difficult today to produce pesticides, herbicides etc derived from natural sources, at a large enough scale to feed the entire population, at the cost of chemical formulations. But some substitution may be possible.
https://time.com/6196570/sri-lanka-crisis-organic-farming/
Crisis in SRILANKA will ensure that Organic will coexist with Chemical pesticides and Can never be replaced fully with the largest growing population to feed to.
Hi Mam, Is it preferable to add Bayer to portfolio at current price or Gradually build over this year considering the El Nino fears.
You can accumulate over the next few months
Thank you for this in-depth analysis. The glyphosate issue and the potential El Nino situation gives me a pause. As someone from a farming family, I know how much Roundup was useful as an herbicide to the farmer who navigates through worst of times. I am not sure Indian government can afford to ban it totally as there aren’t any viable alternatives afaik. There are some recent studies that show there is not much of an adverse health effect from that molecule, but it indeed is a risk. Thank you again. Appreciate it!
This is a super analysis.
Thanks 🙏
Can you please compare this company with Rallis India.
Rallis India – Equivalent PE multiples, Smaller market capitalization, Tata group company.
BayerCorp parent company is available in 13 times earning but not sure feasible to buy for us.
Rallis has both domestic and export presence so has currency and geographical risks. It does not have access to a pipeline of new molecules or seeds resulting from r&d. It’s financial performance has been far less consistent than Bayer crop so don’t prefer it.
Thanks for your reply.
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