Accumulate Insecticides India; target of Rs 550: Prabhudas Lilladher

Prabhudas Lilladher's research report on Insecticides India

Insecticides India (INST) reported subdued results with EBITDA loss of Rs283mn largely led by high cost inventory provisioning coupled with M2M loss of Rs140mn in FY23. B2C/B2B/exports contribution stood at 51%/35%/14%, as against 65%/26%/9% in the same period last year. Further, Maharatna products contributed 52% of overall revenues in 4Q’23, as against 42% in 4Q’22. Going forward, management remains confident on achieving revenue growth of 10-12% YoY in FY24E aided by a) commencement of new facilities; b) new product launches; and c) significant export registrations. However, remains cautious on margins (guided for 9-10% EBITDA margins) from trailing losses of high cost inventory provisions to be accrued in 1Q’24. Maintain ‘Accumulate’.

Outlook

We trim our FY24/25E EPS estimates by 14%/9% and reduce TP to Rs550/share (earlier Rs650/share) based on 12XFY25 EPS (earlier 13XFY25 EPS), citing passive demand environment coupled with near term margin pressure.

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