Gmul Sahar investment house today upgraded agrochemicals company Makhteshim Agan Industries to Buy from Accumulate.

Analyst Galit Sidemand affirmed the company's price target at NIS 10.5, about 22% above the market.

She warned that Koor Industries (Nasdaq:KOR) might create short-term pressure on the share by selling part of its holdings, and added that the cash-strapped conglomerate might elect to withdraw dividends.

The company takes good advantage of developments in its niche, such as the expiry of patents and consolidations, wrote analyst Galit Sideman.

MAI has sustained growth even though its industry is stagnating, she notes. Its secret is new products, whether obtained through acquisitions or developed in-house. The profit margin on new products can be around 60%.

Its growth is even more impressive when considering the eroding revenues from key market Brazil, due to the 16% devaluation of the real against the dollar during the third quarter.

On the downside for investors, Sideman noted a substantial chance that the Koor conglomerate ¿ which holds the controlling 51% stake in MAI ¿ may sell part of its interest, even at the cost of losing control. This could create pressure on MAI stock, she wrote.

Koor already sold NIS 40 million worth of MAI stock, which led to a slump in its price. But any future Koor-related dip in MAI shares should be temporary in nature.

MAI's anticipated bond issue and securitization deal with Bank of America should boost the company's cash by about $200 million, Sideman writes.

She adds that Koor might well relieve MAI of some of its cash by withdrawing dividends, given its current need for cash.