India Pesticides Limited (IPL) is an R&D driven agro‐chemical manufacturer of Technicals with a growing Formulations business.
IPL is the fastest growing agro‐chemical companies in India in terms of volume of Technicals manufactured. The Company is the sole Indian manufacturer of 5 Technicals and among the leading manufacturers globally for Captan, Folpet and Thiocarbamate Herbicide, in terms of production capacity. IPL also diversified into manufacturing herbicide and fungicide Technicals active pharmaceutical ingredients (APIs) and Formulations. The Company also manufactures herbicide, insecticide and fungicide Formulations. As of March 31, 2021, company’s Technicals were exported to over 25 countries. Exports contributed to 56.7% of revenue in FY21. IPL currently has 2 manufacturing facilities located at Lucknow and Hardoi in Uttar Pradesh. As of March 31, 2021, their aggregate installed capacity of their manufacturing facilities for agro‐chemical Technicals was 19,500 MT and Formulations was 6,500 MT. The Company also commenced construction of 2 manufacturing units which are proposed to be used for herbicide Technicals.
IPL has diversified its product portfolio over the years and have grown into a multi‐product manufacturer of Formulations, herbicide and fungicide Technicals as well as APIs.
As of the date the Company has: a) Obtained registrations for 22 agro‐chemical Technicals and 125 Formulations for sale in India; b) Obtained registration for 27 agro‐chemical Technicals and 35 Formulations for export; IPL has a license to manufacture for 49 agro‐chemical Technicals and 158 Formulations. For APIs, IPL has obtained a license for manufacturing 2 drugs for sale. The Company manufactured 8 export grade Technicals, 2 APIs and over 30 Formulations. The company has recorded 37.17 pct YoY growth in Technicals manufacturing (by volume) between FY20 and FY21, reaching more than 75% plant operating rate.
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a) IPL is the sole Indian manufacturer of 5 Technicals and among the leading manufacturers globally for Captan, Folpet and Thiocarbamate Herbicide, in terms of production capacity;
b) strong R&D and product development capabilities,
c) diversified portfolio of niche and quality specialized products,
d) Company’s core focus is on quality and sustainability and none of its key Technicals are classified as ‘red triangle’ or highly toxic products; e) long term relationship with marque clients,
f) strong sourcing capabilities and extensive distribution network,
g) consistent track record of financial performance,
h) domestic as well as international presence
i) consistent track record of financial performance, healthy balance sheet with long term debt/equity of 0.02x,
i) enjoys good ROE of 34.63% in FY21 which is one of the best in agrochemicals industry
At the upper end of the price band of Rs 296, the issue is quoting at P/E multiple of 25x on FY21 earnings which looks decent as compared to Industry Average P/E of 35x. The issue appears to be reasonably priced. One can Subscribe for a longer-term perspective.
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