India Pesticides’ initial public offering (IPO) worth Rs 800 crore will open for subscription on Wednesday. The agrochemical firm is one of the fastest-growing companies in the country in terms of volume of technicals manufactured. The company has fixed the price bank at Rs 290-296 a piece. The IPO will close on June 25.
The issue includes 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 consists of shares worth Rs 281.4 crore by promoter Anand Swarup Agarwal, and Rs 418.6 crore by other selling shareholders.
The market lot size is 50 shares. Investors can bid for a minimum of 50 equity shares and in multiples of 50 equity shares thereafter. Retail-individual investors can apply for up to 13 lots (650 shares or Rs 192,400) as they are allowed to bid for a maximum amount of Rs 2 lakh.
Proceeds from the fresh issue would be used towards funding the working capital requirements and general corporate purposes. The shares are likely to be listed on July 5. Axis Capital and JM Financial are the book running lead managers to the offer.
Positives: a) India Pesticides has done capacity expansion of 62.5% in the last three years, in which technical capacity has almost doubled and formulation capacity has increased by 8.3%. b) Diversified portfolio of niche and quality specialized agro chemical products. c) India Pesticides has high ROCE & ROE of 45% & 34% in FY2021 along with strong EBITDA margins of 29.2%, noted
Yash Gupta, equity research associate, Angel Broking Ltd.
India Pesticides is an R&D focused agrochemical technical company, which has growing formulations business in herbicides, insecticides and fungicide segments. It also manufactures active pharmaceutical ingredients. It is the only Indian manufacturer and amongst the top five companies globally for several technical products such as folpet and cynomoxanil, used to make fungicides that control fungal growth across a variety of crops. It saw a consistent revenue and profitability growth over the last three fiscals. The revenue from operations increased by 90.48 percent during FY19-FY21.
“Based on FY-2021 PE of 24.5x and EV/EBITDA of 18.2x at upper band of the IPO price, which is slightly better than the peers companies. Similarly, company has one of the best ROE & ROCE of 34% and 45% respectively," Yash Gupta from Angel Broking added.
“Company has a healthy balance sheet with negative net debt to equity. We expect that the upcoming expansion plan and higher capacity utilisation will be the growth drivers for the company in future. We are assigning a subscribe recommendation to the issue," Angel Broking further mentioned.