India Pesticides IPO – Review and Analysis
Bareilly (UP) based India Pesticides IPO would open for subscription on 23rd June 2021. India Pesticides is one of the leading agrochemicals manufacturers in India. Company generated strong revenue and margin growth in the last 3 years. Should you invest in India Pesticides IPO? In this article we would provide complete review and analysis about India Pesticides Limited IPO and provide the risk factors.
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About India Pesticides Limited
India Pesticides Limited is India’s leading agrochemicals manufacturer. Company has two businesses 1) Technicals and 2) Formulations. Company manufactures herbicide, fungicide Technicals, and Active Pharmaceuticals Ingredients (APIs). It is the sole Indian manufacturer of several Technicals i.e., Folpet, Thiocarbamate, and Herbicide. Company also manufactures 30+ formulations of insecticides, fungicides, and herbicides.
India Pesticides Limited competitive strengths
1) Company is among the top 5 global players of Folpet, Thiocarbamate, and Herbicide Technicals.
2) It has diversified product portfolio with specialized products.
3) It has domestic as well as international market presence.
4) Company has consistent track record of financial performance.
5) It has strong Research & Development (R&D) capabilities.
India Pesticides Limited – IPO issue details
India Pesticides IPO would open for subscription on Wednesday 23rd June 2021 and closes on Friday 25th June 2021.
| IPO Opening Date | 23-Jun-21 |
| IPO Closing Date | 25-Jun-21 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 1 per equity share |
| IPO Price band | Rs 290 to Rs 296 per equity share |
| Lot Size | 50 Shares |
| Min Order Quantity | 50 Shares |
| Listing at | BSE and NSE |
| Issue Size | Rs 800 Crores i) OFS – Rs 700 Crores 2) Fresh issue – Rs 100 Crores |
India Pesticides Limited IPO DRHP Link
India Pesticides IPO RHP Link
Objects of the issue
Here are the objects of the IPO issue.
1) Offer for Sale for Rs 700 Crores: Under OFS, selling shareholders would sell the shares and the company would not get any proceeds from this offer.
2) Fresh Issue for Rs 100 Crores:
i) To finance the working capital requirements of the company and
ii) To meet general corporate purposes.
Who are the company promoters?
Anand Swarup Agarwal and the ASA Family Trust are the promoters of the company.
Company Financial Performance
Here are the restated consolidated revenue and profit details in the last 3 years.
| Period ending | Total Revenues (Rs in Mns) | Profits after tax (Rs in Mns) |
Profit % |
|---|---|---|---|
| Mar-19 | 3,460.4 | 439.2 | 12.7% |
| Mar-20 | 4,897.2 | 707.9 | 14.5% |
| Mar-21 | 6,553.7 | 1,345.3 | 20.5% |
Its EPS for FY2021 is Rs 12.07 and last 3 years average EPS is Rs 8.81.
Why to invest in India Pesticides Limited IPO?
Here are a few reasons to invest.
1) India Pesticides Limited is one of the leading agrochemicals manufacturers in India and sole Indian manufacture of several technicals.
2) Company generated strong revenue growth in the last 3 years.
3) Company has shown significant improvement and growth in margins in last 3 years. Its margins were at 12.7% in FY2019 Vs 20.5% in FY2021.
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Risk Factors of investing in this IPO
1) They require certain approvals and licenses in the ordinary course of business. Any failure in getting them can impact the business.
2) Company business is subject to strict technical specifications, quality requirements, regular inspections and auditors. Any failure to comply with quality standards can lead to loss of business.
3) Company is required to comply with applicable regulars of international markets where it exports its products. Its international operations are subject to regulatory risks which can impact its business and operations.
4) Company derives almost all its revenue from sale of technicals and formulations in the agro-chemicals industry and any reduction in demand of such products could have an adverse effect on company business.
5) Its agro chemicals business is subject to climatic conditions, overall area under cultivation and cropping pattern adopted by the farming community. Seasonal variations and unfavorable local and global weather patterns can have adverse effect on its business and operations.
6) For complete internal and external risk factors, you can refer the RHP of the company
India Pesticides IPO Subscription and Listing Dates
| Offer Open | 23-Jun-21 |
| Offer close | 25-Jun-21 |
| Finalization of Allotment | 30-Jun-21 |
| Initiation of Refunds | 01-Jul-21 |
| Credit to Demat Account | 02-Jul-21 |
| IPO Shares Listing Date | 05-Jul-21 |
Price Valuations of India Pesticides Limited IPO
This section helps you know how the issue is priced i.e., overpriced or underpriced.
India Pesticides IPO Issue Price band is Rs 290 to Rs 296.
1) On the upper price band of Rs 296 and EPS of Rs 12.07 for FY21, the P/E ratio works out to be 25x.
2) For the last 3 years average EPS of Rs 8.81, the P/E ratio is 34x.
3) Means, the company asking price of Rs 296 of the upper price band in the P/E range of 25x to 34x.
5) There are listed peers like Sumitomo Chemicals where it is trading at P/E 79x (Highest) and Dhanuka Agritech at P/E of 31x (Lowest) and industry average P/E is 47x.
Hence, India Pesticides Share Price of Rs 296 (upper price band) is reasonably priced.
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India Pesticides IPO – Should you invest?
India Pesticides Limited is India’s leading agrochemicals manufacturers as well as sole Indian manufacturer of specific Technicals.
Company generated strong revenue growth in the last 3 years.
Company’s margins have improved significantly in the last 3 years.
India Pesticides IPO share price is reasonably priced.
Considering all these positive factors, one can invest in this IPO for short term to long term perspective.
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Dear Sir.
I like all your articles on all sectors. Keep it up.
Can you please check is there any typing mistake in above article ?
“Company has shown significant improvement and growth in margins in last 3 years. Its margins were at 12.7% in FY2019 Vs —> “0.5%” <—–in FY2021."
Roshan, Thanks for highlighint this. It is 20.5%. Looks typo error. I have corrected and cleared the cache.
I can call it in-depth and brief analysis. Convinced with your take and tempted to invest up to maximum eligible limit of individual investors. Will you please advise me whether chances of allotment are more if I apply for minimum marketable lot or Rs2 Lakhs?
Hello Ramakrishna, Thanks for the comments. The so called allotment luck depends on how many times it would get oversubscribed. If it is say 1.5x or 2x, then allotment chances would be higher. But if any IPO gets oversubscribed 5x or 10x, it is difficult to get subscription
India Pesticides IPO – Review and Analysis –
Detailed post regarding IPO. I share this post for my Tamil friends interested in Shares.
Thanks Sir Suresh KP
Thank you Rathnavel