Sowing Hope

The average market cap of a number of companies in agri and allied businesses has risen spectacularly in the last 12 months. Between last October and this September, Escorts saw an extraordinary gain of 164 per cent, rice exporter KRBL of 57 per cent and Kaveri Seeds, 29 per cent. (See Making Hay) "Before last year, agri based companies got lower valuations because of the higher volatility of their earnings," says Deepak Jasani, Head, Research, HDFC Securities. All kinds of unexpected factors arose to adversely affect growth for example, cotton seeds had been showing strong growth of over 12 per cent till 2015/16, but thereafter regulation of Bt cotton prices led to a revenue decline. This year's kharif season, however, the acreage devoted to cotton increased nearly 19 per cent, from which the seed industry, too, has naturally benefitted. "In the past year, on the one hand, volatility has reduced, and on the other, dividend yields