India Pesticides shares jumped as much as 24 per cent against the issue price of Rs 296 on Monday, the listing day. It got listed at Rs 360, registering a gain of 21.62 per cent against the issue price on the BSE. The stock debuted at Rs 350 at the NSE, 18.24 per cent increase against the share price. The initial public offer of India Pesticides Limited was subscribed 29 times last month.
India Pesticides’ initial public offering (IPO) worth Rs 800 crore opened for subscription from June 23-25. The issue included a fresh issue of shares worth Rs 100 crore and an offer for sale of shares worth Rs 700 crore by promoters and shareholders. The offer for sale consisted of shares worth Rs 281.4 crore by promoter Anand Swarup Agarwal, and Rs 418.6 crore by other selling shareholders.
India Pesticides Limited is an R&D driven agro-chemical manufacturer of Technicals with a growing formulations business. It is one of the fastest growing agro-chemicals company in terms of volume of technicals manufactured. The company posted 37.17% year-on-year growth in technicals manufacturing by volume between fiscal 2020 and fiscal 2021.
“IPL manufactures generic technicals that are used in the manufacture of fungicides and herbicides as well as APIs with applications in dermatological products. Certain key fungicide technicals it manufactures include: (i) Folpet, used to manufacture fungicides that control fungal growth at vineyards, cereals, crops and biocide in paints; and (ii) Cymoxanil, used to manufacture fungicides that control downy mildews of grapes, potatoes, vegetables and several other crops. Major herbicide Technicals it manufactures include Thiocarbamate herbicides that have application in field crops, such as, wheat and rice, and are used globally. The APIs IPL manufactures has anti-scabies and anti-fungal applications,” said HDFC Securities.
“India Pesticides Limited IPO will get listed on the bourses on Monday and it is expected that investors will receive shares in their de-mat accounts on 2nd July 2021. We have seen good listing for several IPOs in the last two weeks and the expectation for Indian Pesticides Limited is also the same,” Yash Gupta Equity research associate, Angel Broking Ltd.
“If we look at the grey market premium of IPL IPO, it has been volatile since last week and currently it is quoting at ₹60 as per the different sources. If we look at the fundamentals and valuation of stock, fundamentals look good and based on FY-2021 P/E of 24.5x and EV/EBITDA of 18.2x at the upper band of the IPO price, valuations are slightly better than the peer companies. Similarly, the company has one of the best ROE & ROCE of 34% and 45% respectively. We expect listing to be at a premium of 15%-25%. We have assigned a ‘Subscribe’ recommendation to the issue. We suggest short term investors to book at levels of ₹350,” Angel Broking added.
“India Pesticides listed strongly on the exchanges today with 21% premium at Rs 360/Share against its issue price of Rs 296/share. It had seen healthy overall subscription of 29x, given its presence in the fast growing agrochemical space,” said Sneha Poddar, AVP, research, broking & distribution, Motilal Oswal Financial Services Ltd.
“India Pesticides is the sole Indian manufacturer of five technicals and among the leading manufacturers globally for Captan, Folpet and Thiocarbamate Herbicide, in terms of production capacity. Global agro-chemicals market is expected to grow at 7% CAGR to USD86bn by 2024 and IPL is well placed to tap this opportunity. Technicals in India which is strongly driven by export led demand and contract manufacturing, is expected to grow at 8% CAGR. With China+1 strategy, it opens huge opportunity for Indian players like IPL. IPL plans to tap this opportunity by manufacturing complex off patented technicals, wherein 19 Technicals are expected to go off-patent between CY19-26 (opportunity of >USD4.2bn),”
“We like India Pesticides given its presence in fast growing agrochemical space, diversified product portfolio and robust financials. Expanding product portfolio, growing customer base and increasing wallet share of existing customers can help IPL maintain its growth momentum. It is reasonably valued at 30.8x FY21 P/E, vis-à-vis peers, while it enjoys higher RoE of 36%,” she further mentioned.