Subscribe to India Pesticides: Motilal Oswal

Motilal Oswal IPO report on India Pesticides

India Pesticides Ltd (IPL) is one of the leading agro-chemical manufacturer of Technicals (79% of FY21 sales) with a growing Formulations business. Leading manufacturer of Technicals with diversified portfolio: IPL is the sole Indian manufacturer of five Technicals and among the leading manufacturers globally for Captan, Folpet and Thiocarbamate Herbicide, in terms of production capacity. Both Technicals and Formulations portfolio are well diversified among fungicides/herbicides/insecticides along with APIs (10% of revenue); thus de-risking its business model. IPL derives 57% (FY21) of its revenue from exports while top 10 customers also contribute 57% of sales.

Valuation and Outlook

The issue is reasonably valued at 25.3x FY21 P/E on post issue basis, vis-à-vis peers (avg. peer P/E of 36.4x), while it enjoys higher RoE of 36% (avg. peer RoE of 21%). Hence, we recommend Subscribe.

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