Please refer to important disclosures at the end of this report
1
India Pesticides Limited (IPL) was incorporated on December 13, 1984. IPL is an
R&D driven agro-chemical manufacturer of Technicals with a growing
Formulations business. IPL is the fastest growing agro-chemical companies in
India in terms of volume of Technicals manufactured. In Technicals company
manufacture Fungicide Technicals, Herbicides Technicals for the export
market and on Formulation side company manufacture insecticides, fungicide
and herbicides, growth regulators and Acaricides for domestic market. IPL has
also diversified itself in APIs manufacturing in recent times.
Positives: (a) Company has done capacity expansion of 62.5% in the last three
years, in which Technical capacity has almost doubled and formulation
capacity has increased by 8.3%. (b) Diversified portfolio of niche and quality
specialized agro chemical products. (c) Company having very high ROCE &
ROE of 45% & 34% in FY2021 along with very high EBITDA margins of 29.2%.
Investment concerns: (a) Indian agro-chemicals industry is fragmented in
nature and faces competition from different domestic and global
manufacturers for different products that we manufacture. (b) Top-10
customers contribute 57% of companies overall revenue, largest customer
represent 30% of revenue to maintain relations will be challenging for the
company. (c) Any change in categorization of key technical in thr red triangle
will affect the company performance.
Outlook & Valuation: Based on FY-2021 PE of 24.5x and EV/EBITDA of 18.2x at
upper band of the IPO price, which is slightly better than the peers companies.
Similarly company having one of the best ROE & ROCE of 34% and 45%
respectively. Company having a very healthy balance sheet with negative
Net Debt to Equity. We expect the upcoming expansion plan and higher
capacity utilisation will be the growth drivers for the company in future. We
are assigning a “Subscribe” recommendation to the issue.
Key Financials
Y/E March (₹ cr)
FY2020
FY2021
Net Sales
479.6
649.0
% chg
40.8
35.3
Net Profit
70.8
134.5
% chg
61.2
90.0
EBITDA (%)
19.5
28.2
EPS (Rs)
6.4
12.0
P/E (x)
46.6
24.6
P/BV (x)
12.8
8.5
ROE (%)
27.6
34.5
ROCE (%)
35.8
45.2
EV/EBITDA
33.7
18.2
EV/Sales
6.6
5.1
Source: Company, Angel Research
SUBSCRIBE
Issue Open: June 23, 2021
Issue Close: June 25, 2021
QIBs 50% of issue
Non-Institutional 15% of issue
Retail 35% of issue
Promoters 72.0%
Others 28.0%
Fresh issue: ₹ 100 Cr.
Issue Details
Face Value: ₹ 1
Present Eq. Paid up Capital: ₹ 11.18 Cr
Offer for Sale: ₹ 700 Cr
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: ₹ 11.5 Cr
Issue size (amount): ₹800 Cr**
Price Band: ₹ 290- 296
Lot Size: 50 shares and in multiple thereafter
Post-issue mkt. cap: *₹ 3342 cr - **₹ 3409 cr
Promoters holding Pre-Issue: 82.68%
Promoters holding Post-Issue: 72%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Yash Gupta,
+022 39357600, Extn: 6872
Research Analyst
Yash.gupta@angelbroking.com
IPO Note
June 22, 2021
INDIA PESTICIDES LIMITED
IPL Ltd | IPO Note
June 22, 2021
2
Company background
IPL was originally incorporated as ‘India Pesticides Private Limited’, on
December 13, 1984 at Bareilly, Uttar Pradesh. Anand Swarup Agarwal and
the ASA Family Trust are the Promoters of the company. Anand Swarup
Agarwal is the Chairman and non-executive Director of the company. He
has over 35 years of experience in agrochemical manufacturing. Company
has have two distinct operating verticals, namely, (i) Technicals; and (ii)
Formulations.
Technicals: Company manufacture generic Technicals that are used in
the manufacture of fungicides and herbicides as well as APIs with
applications in dermatological products. Technical contributes 78.8% of
companies revenue for the year 2021.
Formulations: Company manufacture and sell various formulations of
insecticides, fungicide and herbicides, growth regulators and Acaricides,
which are ready-to-use products. Company manufacture over 30
Formulations that include Takatvar, IPL Ziram-27, IPL Dollar etc. Formulation
contributes 21.2% of companies revenue for the year 2021.
Key Details about the company
IPL is one of the fastest growing agro-chemicals company
in terms of volume of Technicals manufacturing.
Company are the sole Indian manufacturer of five Technicals
and among the leading manufacturers globally for Captan,
Folpet and Thiocarbamate Herbicide, in terms of production
capacity
Company have a strategic focus on R&D and our R&D capabilities
include two well-equipped in-house laboratories registered with the
DSIR.
Technicals are primarily exported and revenue generated from
exports contributed to 56.71% of revenue from operations in Fiscal
2021. Technicals are exported to over 25 countries including
Australia and other countries in North and South America, Europe,
Asia and Africa.
Formulations products are primarily sold domestically through our
extensive network of dealers and distributors. Company has a
diverse customer base that includes crop protection product
manufacturing companies, such as, Syngenta Asia Pacific Pte. Ltd,
UPL Limited.
Company currently have two manufacturing facilities located at
UPSIDC Industrial Area at Dewa Road, Lucknow and Sandila, Hardoi
in Uttar Pradesh, India that are spread across over 25 acres.
IPL Ltd | IPO Note
June 22, 2021
3
Issue details
The issue size is ₹ 800 Cr, which comprises of fresh issues of ₹ 100 crore &
offer for sale of ₹ 700 Cr in the price band of ₹290-₹296 per share.
Pre & Post Shareholding
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter
9,24,23,945
82.68%
8,29,17,726
72.00%
Public
1,93,61,185
17.32%
3,22,45,782
28.00%
Total
11,17,85,130
100.00%
11,51,63,508
100.00%
Source: Company, Angel Research
Objectives of the Offer
80 Crores out of 100 crores will be used to fund working capital
requirements of the company.
General corporate purposes.
Revenue Mix – Companies revenue mix has changed from 75.4% to
78.9% for Technicals, this also helps the company in increasing the
margins as majority of technicals are exported to Australia, Europe etc.
Revenue Mix
FY 2020-21
FY 2019-20
FY 2018-19
Product
Revenue
(Cr)
% of
Revenue
Revenue
(Cr)
% of
Revenue
Revenue
(Cr)
% of
Revenue
Technicals
506.8
78.9%
383.2
80.2%
256.6
75.4%
Formulations
135.7
21.1%
94.6
19.8%
83.6
24.6%
Total
642.5
100%
477.8
100%
340.2
100%
Source: Company, Angel Research
Capacity Utilisation – Company has increase its overall capacity
from 16000 Mt to 26000 Mt in last 3 years, as of now capacity utilisations are
at 75.9%.
Capacity Utilisation
FY 2020-21
FY 2019-20
FY 2018-19
Products
Capacity
Utilisation
Capacity
Utilisation
Capacity
Utilisation
Technicals
19500
76.9%
14500
76.1%
10000
79.7%
Formulations
6500
72.7%
6500
58.2%
6000
58.9%
Total
26000
75.9%
21000
70.5%
16000
71.9%
Source: Company, Angel Research
IPL Ltd | IPO Note
June 22, 2021
4
Key Management Personnel
Anand Swarup Agarwal is the Chairman and non-executive Director of the
company. He has over 35 years of experience in agrochemical
manufacturing. He is one of the Promoters and one of the founders of the
company. In the past he was the part time non-official director on the
board of directors of Punjab National Bank.
Rajendra Singh Sharma is the whole-time Director of the company. He has
been associated with the company since last 22 years and has experience
in agro-chemical manufacturing.
Rahul Arun Bagaria is the Non-Executive Director of the company. He has
more than 5 years of professional experience and expertise in corporate
law and taxation.
Adesh Kumar Gupta is the Independent Director of the company. He
previously held the position of whole time director and chief financial officer
at Grasim Industries Ltd. and has also been a director at Ultra Tech Cement
Ltd.
Mohan Vasant Tanksale is the Independent Director of the company. He
was previously the chairman and managing director of Central Bank of
India and was an executive director on the board of Punjab National Bank
till June 2011.
Madhu Dikshit is the Independent Director of the company. In the past, she
has been associated with the CSIR – Central Drug Research Institute,
Lucknow as a director.
IPL Ltd | IPO Note
June 22, 2021
5
Consolidated Profit & Loss Account
Y/E March (₹ Cr)
FY2019
FY2020
FY2021
Total operating income
341
480
649
% chg
-
40.8
35.3
Total Expenditure
275
386
466
Cost of Materials Consumed
195
257
330
Changes in inventories
-7
-4
-20
Employee Benefits Expense
13
16
23
Other Expenses
75
117
133
EBITDA
65
94
183
% chg
-
43.3
95.7
(% of Net Sales)
19.2
19.5
28.2
Depreciation& Amortisation
4.0
5.1
6.1
EBIT
61
88
177
% chg
-
44
100
(% of Net Sales)
18.0
18.4
27.3
Finance costs
5.6
5.2
3.4
Other income
5.4
10.1
6.4
(% of Sales)
1.6
2.1
1.0
Recurring PBT
61
93
180
% chg
-
53
93
Exceptional item
-
-
-
Tax
17
23
45
PAT (reported)
44
71
135
% chg
-
61
90
(% of Net Sales)
12.9
14.8
20.7
Basic & Fully Diluted EPS (Rs)
3.9
6.4
12.0
% chg
-
61.2
89.5
Source: Company, Angel Research
IPL Ltd | IPO Note
June 22, 2021
6
Consolidated Balance Sheet
Y/E March (₹ Cr)
FY2019
FY2020
FY2021
SOURCES OF FUNDS
Equity Share Capital
3.2
3.2
11.2
Other equity (Retained Earning)
184
254
378
Shareholders Funds
187
257
389
Total Loans
55
24
30
Other liabilities
8
8
9
Total Liabilities
250
289
428
APPLICATION OF FUNDS
Property, Plant and Equipment
70
95
120
Right of Use Assets
-
4
4
Capital work-in-progress
5
1
12
Current Assets
233
255
367
Inventories
36
39
70
Trade Receivables
178
183
214
Cash and Cash Equivalents
2
7
2
Other Balances with Banks
1
1
41
Other Financial Assets
1
1
0
Other Current Assets
16
25
39
Current Liability
67
77
89
Net Current Assets
166
178
278
Other Non Current Asset
9
10
14
Total Assets
250
289
428
Source: Company, Angel Research
IPL Ltd | IPO Note
June 22, 2021
7
Consolidated Cash Flow Statement
Y/E March (₹ Cr)
FY2019
FY2020
FY2021
Operating profit before working capital changes
68
101
190
Net changes in working capital
-54
-3
-62
Cash generated from operations
14
97
128
Direct taxes paid (net of refunds)
-17
-22
-45
Net cash flow (used in)/from operating activities (A)
-3
75
83
Purchase of property
-7
-31
-42
Others
1
0
-42
Cash Flow from Investing
-7
-31
-84
Proceeds from term Borrowings
13
0
1
Repayment of term Borrowings
-9
-3
-7
Proceeds from short-term borrowings (net)
11
-30
9
Dividend (including dividend tax)
-1
-1
-4
Interest paid (net)
-5
-5
-3
Cash Flow from Financing
9
-39
-4
Inc./(Dec.) in Cash
-1
5
-5
Opening Cash balances
2.4
1.6
6.7
Closing Cash balances
1.6
6.7
1.9
Source: Company, Angel Research
IPL Ltd | IPO Note
June 22, 2021
8
Financial Ratio
Y/E March
FY2019
FY2020
FY2021
Valuation Ratio (x)
P/E (on FDEPS)
75.1
46.6
24.6
P/CEPS
64.9
41.4
23.5
P/BV
5.0
12.8
8.5
EV/Sales
9.4
6.6
5.1
EV/EBITDA
48.9
33.7
18.2
Per Share Data (₹)
EPS (Basic)
3.9
6.4
12.0
EPS (fully diluted)
3.9
6.4
12.0
Cash EPS
4.6
7.2
12.6
Book Value
58.8
23.1
34.9
Returns (%)
ROE
23.5
27.6
34.5
ROCE
32.3
35.8
45.2
Turnover ratios (x)
Receivables (days)
191.0
139.4
120.5
Inventory (days)
38.1
29.4
39.4
Payables (days)
-
-
-
Working capital cycle (days)
229.1
168.8
159.9
Source: Company, Angel Research
IPL Ltd | IPO Note
June 22, 2021
9
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India
Limited, Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository
Participant with CDSL and Portfolio Manager and investment advisor with SEBI. It also has registration with AMFI as a Mutual
Fund Distributor. Angel Broking Limited is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst)
Regulations, 2014 vide registration number INH000000164. Angel or its associates has not been debarred/ suspended by
SEBI or any other regulatory authority for accessing /dealing in securities Market. Angel or its associates/analyst has not
received any compensation / managed or co-managed public offering of securities of the company covered by Analyst
during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any
investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this
document should make such investigations as they deem necessary to arrive at an independent evaluation of an
investment in the securities of the companies referred to in this document (including the merits and risks involved), and
should consult their own advisors to determine the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding
positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a
report on a company's fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports
available on our website to evaluate the contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other
reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on
as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. Angel Broking Limited has not independently verified all the information contained
within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the
accuracy, contents or data contained within this document. While Angel Broking Limited endeavors to update on a
reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that
prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be
reproduced, redistributed or passed on, directly or indirectly.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise
from or in connection with the use of this information.