Broker Analysis
June 23, 2021 / 12: 17 PM IST
Motilal Oswal IPO myth on India Pesticides
India Pesticides Ltd (IPL) is one amongst the leading agro-chemical producer of Technicals (79% of FY21 gross sales) with a rising Formulations alternate. Main producer of Technicals with tons of portfolio: IPL is the sole Indian producer of 5 Technicals and amongst the leading producers globally for Captan, Folpet and Thiocarbamate Herbicide, in terms of manufacturing ability. Both Technicals and Formulations portfolio are successfully tons of amongst fungicides/herbicides/insecticides alongside with APIs (10% of income); thus de-risking its alternate mannequin. IPL derives 57% (FY21) of its income from exports while high 10 customers moreover make contributions 57% of gross sales.
Valuation and Outlook
The drawback is fairly valued at 25.3x FY21 P/E on post drawback foundation, vis-à-vis peers (avg. gaze P/E of 36.4x), while it enjoys better RoE of 36% (avg. gaze RoE of 21%). Hence, we counsel Subscribe.
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