India Pesticides Limited

Started in 1973, India Pesticides Limited (IPL) is one of the leading agrochemicals manufacturers in India. The company operates in two business verticals; 1 Technicals and 2. Formulations. It manufactures herbicide, fungicide Technicals, and Active Pharmaceuticals Ingredients (APIs). It is the sole Indian manufacturer of several Technicals i.e. Folpet, Thiocarbamate, and Herbicide. The company also manufactures 30+ formulations of insecticides, fungicides, and herbicides. Company's technicals are majorly exported to 20+ countries including Australia, Asia, Africa, and European countries, contributed 62% of technical segment revenues in Fiscal 2020. However, agrochemical formulations are primarily sold to domestic crop protection manufacturers i.e. Syngentia Asia Pte Ltd, UPL Ltd, ASCENZA AGRO, S.A., Conquest Crop Protection Pty Ltd, Sharda Cropchem Limited, and Stotras Pty Ltd. Currently, the firm has two manufacturing plants UPSIDC Industrial Area at Dewa Road, Lucknow and Sandila, Hardoi in Uttar Pradesh, India with an installed capacity of 19,500 MT for agrochemicals and 6500 MT for formulations. As per financial performance, IPL has posted total income/net profits of Rs. 346.04 cr. / Rs. 43.87 cr. (FY19) and Rs. 489.73 cr. / Rs. 70.59 cr. (FY20). For FY21, it has reported net profit of Rs. 134.89 cr. on total revenue of Rs. 655.38 cr. So company has posted consistent high growth over last couple of years. Company has posted an average EPS of Rs. 8.81 and average RoNW of 30.37% for last three fiscals. Issue is priced at a P/BV of 8.47 as per NAV of 34.94/- on 31.03.21. As per FY21 earnings, P/E is around 25. So issue looks reasonably priced. As per RHP, comparison between the listed peers are shown in above table.  On BRLM's front, two BRLMs are associated with this IPO, and have handled around 31 IPO in last three fiscals. From last 10 IPOs, 5 are opened below issue price and remaining are opened above issue on the day of listing. As of now, 2 are trading below price and remaining are trading above issue price. ( As on 21.06.21) As per financials, company has shown good growth, RoNW is 34.54% for last three fiscals and issue is priced at P/E of around 25 as per FY21 earnings. In current pandemic situation, speciality chemicals and agrochemicals sector has outperformed market. Also different Make In India efforts by Government, increased locally produced demand. Performance of BRLM is good. So, we are giving SUBSCRIBE rating to this IPO.

• 1 Anand Swarup Agarwal
• 2 ASA Family Trust