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Aarati Krishnan

DESPITE its sharp run-up in the past month, the Monsanto India stock continues to hold potential for capital appreciation.

Risk-seeking investors may consider accumulating the stock at current price levels. At the price of Rs 727, the stock price trades at a price earnings multiple of about 12 times the 2002-03 earnings. This valuation appears reasonable in light of the company's strong growth prospects.

A good start to the monsoon promises a sharp expansion in acreage of major crops. This could pep up offtake of Monsanto's products after the drought in the previous year. Even if the initial expectations of the monsoon are belied, Monsanto has displayed resilience to the cyclical swings in the sector over the past three years.

In 2002-03, a particularly difficult year, it managed a 63 per cent jump in profits despite flat sales, aided by superior product mix - focus on high margin products such as hybrid seeds and herbicides. Unhindered access to the parent's pipeline is an added strength.

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