Hold Insecticides India; target of Rs 700: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Insecticides India

Insecticides India (INST) reported revenue/EBITDA/PAT growth of 31%/7%/7% YoY. Key highlights are: (a) B2C/B2B/exports contributed to 73%/25%/2% in 2QFY23; (b) Despite taking price hikes aided by superior product mix, gross margins declined 110bps YoY to 26.7% led by provisions of high cost inventory; (c) inferior gross margins coupled with MTM provisions of Rs110mn due to forex has led to EBITDA margin contraction of 270bps YoY to 11.8%; (d) Institutional (B2B) category grew +31% YoY in 2Q; (e) launched 1 new product (Izuki- under 9(3) category) in 2Q, (4 new products in 1HFY23); to launch +6 products in FY23E; (f) capex of Rs1.1bn largely behind; technical synthesis plant to commence in 3QFY23. Going forward we expect INST’s business to pick up driven by new launches, better margin profile of in-licensing molecules, commencement of new capacities and backward integration projects. The management expects double digit revenue growth with absolute margins improvement as compared to last year’s level led by better contribution from new product launches and superior product mix in FY23E.

Outlook

We broadly retain our estimates for FY23/24E. We introduce and roll forward our valuations to FY25E. Maintain ‘HOLD’ with revised TP of Rs700 (Rs920 earlier-bonus share adjustment) based on 13x FY25E EPS (5 year high/low/average of 19x/5x/13x).

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Insecticides India - 08-11-2022 - prabhu