India Pesticides’ Rs 800-crore IPO will open for subscription on Wednesday, June 23, 2021, in the cost band of Rs 290-296 per share of the face worth of Re 1, each and every. The firm is amongst the quickest-increasing agrochemical suppliers in terms of volume of Technicals manufactured. The company’s business enterprise verticals consist of Technicals, Formulations and APIs. Currently, the firm manufactures eight Technicals, two APIs and more than 30 Formulations. Considering the FY21 adjusted EPS of 11.68 on a post-concern basis, the firm is going to list at PE of 25.34 with a market place cap of Rs 3,408.8 crore whereas its peers namely Dhanuka Agritech, UPL Ltd, Rallis India and PI Industries are trading at a P/E of 21.4, 20.4, 31.5, 58.6 respectively, analysts stated.
India Pesticides’ domestic and international competitors
The Indian agro-chemical compounds market is fragmented in nature and India Pesticides faces competitors from distinctive domestic and international suppliers for distinctive solutions that they manufacture. In the domestic markets, its competitors consist of UPL Ltd, PI Industries Ltd and Jubilant Lifesciences Ltd, when in the international markets, it faces competitors from organizations such as China National Corporation Ltd, Sumitomo Chemicals Co. Ltd and BASF SE, in the manufacture of agro-chemical compounds, stated analysts at Axis Capital. “Some of their competitors in the agro-chemicals industry may have greater financial resources, technology, research and development capability, greater market penetration and operations in diversified geographies and product portfolios, which may allow their competitors to better respond to market trends,” they added.
India Pesticides IPO: Should you subscribe?
Last week, India Pesticides announced the IPO cost band and following that its grey market place premium has now jumped to Rs 90-one hundred and is experiencing volatility, stated Yash Gupta Equity Research Associate, Angel Broking. Gupta expects the grey market place premium for India Pesticides will be volatile for the next 2-3 days and recommends investors to focus more on the fundamentals of the IPO. The IPO has been priced at the PE levels of 24.5 occasions at a larger band of the cost variety of Rs 296. Company earns 56% of income from the export market place and 44% of income from the domestic market place. “Company’s overall fundamentals look very attractive. We have a positive outlook for the Indian Pesticides Limited IPO,” Gupta stated.
Those at Marwadi Shares and Finance have provided a ‘subscribe’ rating to the concern as the firm is one of the quickest-increasing agrochemical organizations in India with powerful R&D capabilities and a diversified item portfolio. Also, the firm is readily available at affordable valuations as compared to its peers.
The development in income and earnings appear healthful, Rajesh Singla, Founder & CEO of pre-IPO consultancy firm Planify India, told TheSpuzz Online, adding that operating margins are really powerful as compared to the market which is close to 28 per cent. Despite COVID-19, the market has grown drastically 33 per cent on-year and India Pesticides is in line to it. “Only negative is company receivable debt which is close to 120 days and (Cash Flow from Operations)/EBIDTA 45 per cent which is 75- 80 per cent for the Industry. Hence, the Cash Conversion Cycle is big as compared to Industry, Singla said. “Company offers IPO at price band where investors will get the shares at P/E of 24 w.r.t. industry P/E of 36. Hence something is left on the table for the investors. Company IPO should easily float through with strong participation from the retail investors,” Rajesh Singla, stated.
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