Angel Broking rates Bayer CropScience as 'buy'

CMP: Rs 340
Target price: Rs 501

Angel Broking has rated agrichemical company Bayer CropScience (BCS) as a ���buy���, on expectations of improved margins due to the ongoing restructuring exercise.

���BCS is a market leader in the Indian agrichemical sector, with a market share of 23%. Going ahead, there exists a huge opportunity for BCS to grow its domestic business, given that the penetration of pesticides in the Indian market is abysmally low compared to its Asian and Global peers,��� said the brokerage in a note to its clients.

India produces approximately 16% of the world���s total food grain, but utilises a mere 2% of pesticides.

The brokerage says it expects the company���s Return on Equity (RoE) to remain robust over FY2009-11 (Expected) at around 24% levels.

It has arrived at a sum of the parts (SOTP) target price of Rs 501 by assigning a target price to earning (PE) multiple of 10 times for BCS��� core business.

It has also added 50% discounted value of the company���s Thane land, translating into Rs 101 share (post tax).