Accumulate Insecticides India target of Rs 817: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Insecticides India

In the current scenario of buoyant stock markets, the steep discount at which INST trades, vis-à-vis its peers, has only expanded. Even a marginal contraction in discount can lead to rerating of multiples for INST. The business is likely to turnaround in the ensuing quarters driven by (a) new launches (b) commencement of new capacities and (3) initialisation of backward integration projects. Insecticides India reported better than expected results driven by higher than anticipated sale of institutional business and branded products. Gross margin expansion was steep at 1108 bps (PLe 942 bps) as INST resorted to inventory liquidation in Q4FY20 due to distress sale of generic products & heightened competitive intensity in Thimet & Nuvan.

Outlook

We increase our EBITDA/PAT estimates by 8%/13% for FY22E and 3%/5% for FY23E to factor in higher business growth from new launches and better margin profile of inlicensing molecules. We roll over to FY23 earnings, increase the target multiple on the stock from 9x to 11x. Due to recent run-up in stock price, we downgrade the stock to ACCUMULATE (from Buy) with revise target price of Rs 817 (Previous 506) based on 11x FY23 EPS of Rs 74.3.

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