India Pesticides IPO subscribed 29 times IPO review - Price, business, financials

 Hi, I Saumya Manna welcome you to the and today we will discuss India Pesticides Ltd IPO. We will talk about the company, industry, pros, and cons in detail.

India Pesticides IPO details

So first let us discuss the objectives of the IPO, the first being to fulfill the 80 Cr working capital need and the second is for general corporate purposes. 

About India Pesticides Ltd

Now let us discuss the company India Pesticides Ltd that was incorporated in 1984 and is one of the leading manufacturers in the agrochemicals sector and has 2 business verticals technicals and formulations where they manufacture herbicides, fungicides and APIs.

The company has a leading advantage of making some formulations that they manufacture exclusively. It is the sole manufacturer of Folpet, Thiocarbamate and herbicide with 30+ formulations. The company exports technicals to 25 countries including America and Europe.

The company distributes formulations in India through its extensive network of distributors Till now you might have understood about technicals and formulations but they also make APIs APIs meaning Active Pharmaceutical Ingredients with major use in dermatological products.

Let us now see the industry and its expected compounded growth We have displayed the data from 2014 to 2024, the global agrochemical market was at $62.5 billion in 2019 And is forecasted to rise to $86 billion by 2024, meaning a CAGR of 6.6%, and saw a CAGR of 5.15% from 2014 to 2019 Now let us observe the factors that will bring this growth in the agrochemical sector. 

As demand is rising from agricultural products with limited land, the pressure would increase the sale of these agrochemicals. The second is the rise in global population which will drive the growth of agro products. 

There has been an increase in farmers purchasing power due to which they buy more of these chemicals to increase their productivity. So these were the factors that can dictate the growth of the sector. 

India Pesticides Ltd Financial

Let us now see the company's financials and we have discussed the revenue and profits. If we see the revenue in Mar 2019, it was 346.04 Cr and profit was 43.9 Cr This jumped to 489.73 Cr and 70.8 Cr in Marc 2020. 

By Mar 2021, the revenue rises to 655.37 Cr and profit to 134.5 Cr, so we can see a regular growth Their OPM is 27.9%, NPM is 20.52%, ROE is 34.53% which is very good. The company wants to list itself at a PE ratio of 24 which is less as compared to the industry's at 31. 

Company pros 

Let us now discuss the pros of investing in the company. The biggest agrochemical exporter is China with 30% market share and India comes at 3rd So the western companies are slowly shifting towards India due to the cheap manufacturing. 

The per capita consumption of crop of farmers of India is 10 times lower to the world hence this could increase the production of these products. 

So the next pro is if the industry grows at 6.6% CAGR as forecasted, then the company can also benefit a lot The next is a good ROE at 30% and the PE is less than that of the industry which is a plus point. 

Company cons

Now let us discuss the cons, the first being if any stringent laws are passed, the industry will suffer, we can margin hits. So we have to pay attention to the norms related to the environment. 

The next is the concentration risk, their 20% sales come from the top 1 client and 57% from the top 10 We have to see how the company will reduce their risk and diversify the revenue. 

The next is the dependency on China for 29% of their raw materials, So any geopolitical risk can hamper this situation and impact the company. 

The next is the high competition with companies like UPL, PI Industries Rallis, etc. 

India Pesticides IPO details

Let us now quickly see the important dates regarding the IPO The IPO will be open between 23rd June to 25th June and the price band is between 290 to 296 per equity share. 

One lot is of 50 shares meaning you would have to invest a minimum of Rs.14900 The issue size is 800 Cr with fresh issue worth 100 Cr and rest 700 Cr OFS The tentative listing date is 5th July.

Now you can also read Best 3 Dividend Paying Stocks - Pay Dividend Soon - Up Coming Dividend 2021





That is then end of this article.

Good Luck : )

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