Stock watch: Agro Dutch Inds

The Chandigarh-based Rs 144 crore Agro Dutch Industries Limited (ADIL), is a good stock to watch out in the future. The ADIL scrip stayed flat with a marginal increase of 0.41 per cent or 0.30 points to close at Rs72.70.

ADIL is India's largest mushroom producer and accounts for 85 per cent of the country's mushroom production and exports. The company operates mainly in two categories namely, white button mushroom cultivation and can manufacturing.

Wheat straw is the most vital component for mushroom growing and ADIL produces 80 per cent of India's wheat. The company plans to pump in over Rs 100 crore to modernise its entire unit and increase its current installed capacity.

After the expansion, the company's installed capacity will increase from 36,000 tonne to 50,000 tonne per annum. It is also investing Rs 35 crore in expanding its can making facility. The company was awarded the 'Best Export Can' Award by the Tin Promotion Council of India.

The company has a strong order book worth Rs 81.4 crore for this financial year. Agro Dutch has also proposed a rights issue worth Rs 36.95 crore. The company announced to make a rights issue of 1,47,80,000 equity shares at a price of Rs 25 per share on rights basis in the ratio of 1:1.

Based on some broker estimates, the stock is trading at 6 times FY06 earnings.