ET Intellect GROUP: India Pesticides plans to raise Rs 100 crore through the issue of fresh equity and Rs 700 crore through an offer for sale of existing shares. After the IPO, the promoter group’s comprising will be reduced to 72% from all over 83%. Investors may consider the issue given the company’s high growth business and relatively beautiful valuations. The agrochemical company, which equips products to bigger world-wide agrochemical manufacturers, is benefitting from a rising need for an alternative source other than China.BusinessLucknow based India Pesticides makings technologicals — active ingredients used for manufacturing pesticides — and formulations, who the hell is concoctions containing active ingredients. In FY21, technologicals lent 79% to the revenue. It has two producing faculties in Uttar Pradesh — 19,500 metric tonnes( MT) for technological and 6,500 MT for formulations–which currently operate at over 75% used. It plans to add 10,000 MT capacity in the next two years. The share of exports has increased to 60% from 50% 2 years ago. Its major clients include Syngenta, Ascenza, UPL and Conquest. The top 5 patients account for 35% of sales.FinancialsBetween FY19 and FY21, revenue grew by 38% annually to Rs 649 crore. The operating profit before depreciation and amortisation( EBITDA) and net profit grew by 64% and 75% to Rs 189.5 crore and Rs 134.9 crore respectively. The EBIDTA margin was 29% for FY21 and the return on equity was 35%. The fellowship was net indebtednes free at the end of FY21. Though the business asks high working capital, its fraction relative to marketings has reduced to 32% from 42% over the past two years.ValuationsThe companionship necessitates a price-earnings( P/ E) multiple of 25 based on FY2 1 earnings. It appears to be reasonable when compared against peers such as PI manufactures, Bharat Rasayan and Dhanuka Agritech, which transaction at P/ Es of 60, 34 and 20.
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