india pesticides IPO Archives

Reliance Industries to venture into green energy business

At the 44th Annual General Meeting (AGM) of Reliance Industries Ltd (RIL), Mukesh Ambani announced the company’s mega investment into a new green energy business. RIL aims to build four giga factories to manufacture and integrate critical components at an investment of Rs 60,000 crore over the next three years.

Ambani further announced that RIL plans to close its deal with Saudi Aramco this year. Also, the company will launch a low-cost smartphone— ‘JioPhone Next’ (developed in collaboration with Google) in September 2021. RIL’s Chairman also claimed that Reliance Jio will be the first to launch 5G in India.

Read more here.

Adani’s subsidiary strikes coal at Carmichael mines in Australia

Adani Group’s Australian mining arm, Bravus Mining & Resources, has struck coal at the Carmichael mine in Queensland, Australia. In a statement, Bravus CEO David Boshoff said the company is on track to export its first coal this year. India will be a foundation customer for the Carmichael mine. Bravus has already secured the market for 10 million tonnes per annum (MTPA) of coal produced at the mine.

Read more here.

SBI Cards launches co-branded credit card with Fabindia

SBI Cards & Payment Services has partnered with Fabindia to launch an exclusive co-branded contactless credit card, Fabindia SBI Card. The card is designed with curated benefits and privileges to offer a rewarding shopping experience to its premium customers. It comes in two variants— Fabindia SBI Card SELECT and Fabindia SBI Card. All Fabindia SBI Card customers will get direct entry to the FabFamily loyalty program.

Read more here.

Zydus Cadila gets USFDA approval to market generic sclerosis treatment drug

Zydus Cadila has received tentative approval from the US Food & Drug Administration (USFDA) to market Fingolimod capsules in the US. The drug is used to treat multiple sclerosis (a potentially disabling disease of the brain and spinal cord). The capsules will be manufactured at the pharma company’s manufacturing facility at the Special Economic Zone (SEZ), Ahmedabad.

Read more here.

Mindspace REIT commits to 100% renewable electricity use by 2050

Mindspace Business Parks REIT has joined the global RE100 initiative led by Climate Group in partnership with the Carbon Disclosure Project (CDP). With this, the firm has committed to transform into 100% renewable electricity use across all areas services and maintained within its portfolio by 2050. Mindspace REIT will also make renewable energy accessible to tenants who choose to avail of green energy. Currently, the REIT sources about 10% energy through renewable sources such as solar energy and renewable energy certificates (RECs).

Read more here.

HFCL to set up PM-WANI powered connectivity for Baidebattu village

HFCL, in collaboration with Telecom Infra Project, has announced the setting up of their second PM-WANI (Wi-Fi Access Network Interface)-powered connectivity for Baidebattu village in Karnataka. The company will set up a robust outdoor Wi-Fi network for providing broadband internet connectivity. It will offer high-speed Wi-Fi connectivity to over 9,000 residents of the village. The network is expected to go live by July 31, 2021.

Read more here.

CBI searches premises of CG Power & Industrial Solutions in Mumbai

The Central Bureau of Investigation (CBI) carried out searches at the premises of CG Power and Industrial Solutions (previously known as Crompton Greaves) on Thursday. This is in connection with an alleged loan fraud of Rs 446 crore in Yes Bank involving industrialist Gautam Thapar. The CBI has alleged that the accused have indulged in a criminal conspiracy, criminal breach of trust, cheating, and forgery for diversion of public money to the tune of Rs 466.15 crore.

Read more here.

West Coast Paper Q4 Results: Net profit declines 37.5% YoY to Rs 75 crore

West Coast Paper Mills reported a 37.53% YoY decline in consolidated net profit to Rs 74.92 crore for the quarter ended March (Q4). Its revenue from operations rose 26.14% YoY to Rs 937.03 crore during the same period. West Coast Paper reported a net loss of Rs 3.10 crore for the financial year ended March 30, 2021 (FY21). It had posted a net profit of Rs 370.38 crore in FY20. The company’s board has recommended a final dividend of Re 1 per share.

Read more here.

India Pesticides IPO subscribed 3.79 times on second day of bidding

The Rs 800 crore initial public offering (IPO) of India Pesticides Limited was subscribed 3.79 times on the second day of bidding. Investors have put in bids for 7.32 crore equity shares against the offer size of 1.93 crore shares. The portion reserved for retail investors was subscribed 5.88 times. The portion set aside for Non-Institutional Investors (NIIs) was subscribed 91%, and that of Qualified Institutional Buyers (QIBs) 2.31 times. The agrochemical company’s public issue closes tomorrow.

To learn more about the IPO, click here.

TCS launches ‘Quartz for Markets’

Tata Consultancy Services (TCS) announced the availability of a new solution, termed as ‘Quartz for Markets’, for Market Infrastructure Institutions (MIIs). It helps MIIs offer end-to-end next-generation services around tokenised securities and drive their future growth. The solution supports multiple asset classes, including equity, fixed income, warrants, and asset-backed tokens like real estate, gold, art, and non-fungible tokens (NFTs). MIIs include exchanges, depositories, central banks, payment infrastructures, private banks, custodians, etc.

Read more here.

India Pesticides Ltd launched its three-day initial public offering (IPO) on June 23. It is the fifth major public issue to hit the Indian markets this month. In this article, we take a closer look into the company and its IPO.

Company Profile – India Pesticides Limited

India Pesticides Limited (IPL) is engaged in the manufacturing and sales of agrochemicals in India. It was incorporated in 1984. The company offers herbicide and fungicide technicals. They are the sole Indian manufacturer of five technicals and among the leading manufacturers globally for Captan, Folpet, and Thiocarbamate herbicide (in terms of production capacity). The company also manufactures over 30 formulations of herbicides, insecticides, and fungicides. These are all essential inputs that protect crops from pests and fungus. IPL also offers Active Pharmaceutical Ingredients (APIs)— the raw materials used for making drugs.

Their technicals are exported to more than 25 countries across Asia, Africa, Europe, and the Americas. The exports contributed ~62% to the total technical segment revenues in the financial year 2019-20 (FY20). IPL’s agrochemical formulations are primarily sold to prominent crop protection manufacturers such as Syngenta Asia Pacific, UPL Limited, Ascenza Agro S.A., Conquest Crop Protection Pty., Sharda Cropchem Ltd, and Stotras Pty.

India Pesticides has two manufacturing plants in Uttar Pradesh. The aggregate installed capacity of the plants is 19,500 million tonnes (MT) for agrochemical technicals and 6,500 MT for formulations. The company is reportedly constructing two new manufacturing units, which will be used for producing herbicide technicals.

IPL is well-known for its Research & Development (R&D) capabilities. They have focused extensively on expanding their product portfolio and growing their customer base. The company is run by experienced promoters and a strong management team, led by Anand Swarup Agarwal. He has over 35 years of experience in agrochemical manufacturing.

About the IPO

In May 2021, India Pesticides received approval from market regulator SEBI to raise funds via an initial public offering (IPO). The public issue opens on June 23 and closes on June 25. The total issue size of the IPO is Rs 800 crore. This comprises a fresh issue of ~33.78 lakh shares, aggregating up to Rs 100 crore. It also includes an offer for sale (OFS) of up to Rs 700 crore by existing shareholders. The price band for the IPO has been fixed at Rs 290-296 per share.

Individual investors can bid for a minimum of 50 equity shares (1 lot) and in multiples of 50 shares thereafter. You will need a minimum of Rs 14,800 to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 650 equity shares (13 lots). However, if you are planning to apply for more than 1 lot, keep in mind that your capital may get blocked for no reason if the IPO is oversubscribed.

India Pesticides plans to utilise the net proceeds from the IPO for two main purposes:

To finance the working capital requirements of the company
To meet general corporate purposes

The total promoter holding in the firm will reduce from 82.68% to 72% post the successful completion of the IPO.

Financial Performance

India Pesticides has consistently posted strong growth in revenues and profits over the last three financial years. It seems that the Covid-19 pandemic has not affected the company’s financial performance at all, despite having to temporarily shut down manufacturing units amidst strict lockdowns. Its revenues have jumped by 90.5% during FY19-FY21. Its net profit increased by 90% YoY to Rs 134.5 crore, and total income by 33.8% YoY in FY21. EBITDA margin has increased from 20.7% in FY19 to 29.2% in FY21. The rising demand for the various agrochemical products they offer will continue to drive overall financial growth.

The company’s Return on Capital Employed (ROCE) stands at 45.18%, which is very high when compared to its peers in the Indian agrochemical industry. It means that for every Rs 100 worth of capital employed, IPL earns Rs 45.18 on it. The Return on Equity (RoE) of 34.5% is also quite high when compared to competitors. Over the last three years, the company has posted an average Earnings Per Share (EPS) of Rs 8.8.

Risk Factors

The company requires certain approvals and licenses to manufacture and sell its products in India and across the globe. This includes registrations from the Central Insecticides Board and Registration Committee (CIBRC). If they fail to obtain such registrations or get their licenses renewed, it could adversely impact the firm’s operations and financial performance.
The operations conducted by India Pesticides are subject to regular inspections or audits by its customers. The failure to meet quality standards and technical specifications prescribed by customers may lead to loss of business. This would negatively impact the company’s reputation and financial results.
IPL has to comply with strict regulations of various international markets where they sell their products. Thus, its global operations are subject to regulatory risks that could negatively affect its overall performance.
The failure to identify or understand evolving industry trends or the inability to develop new products to meet customer demands may adversely affect its business/financial growth.
Seasonal variations or unfavorable weather patterns may have a negative impact on IPL’s sales growth.
The revenue derived from India Pesticides’ top 10 customers represents around 69.3% of its overall sales income (as of Sept 30, 2020). The loss of any one of these customers or even a reduction in purchases by them will negatively affect financial results.

IPO Details in a Nutshell

Axis Capital, JM Financial, and KFin Technologies Pvt Ltd. have been selected as the book-running lead managers to the public issue. India Pesticides had filed draft papers for its IPO in February 2021. You can read it here.

Ahead of the public issue, IPL was able to raise Rs 240 crore from 12 anchor investors. This includes foreign portfolio investors (FPIs) such as Abu Dhabi Investment Authority (ADIA), Integrated Core Strategies, Wells Fargo, Tara Emerging Asia Liquid Fund, Plutus Wealth Management, and BNP Paribas.

Conclusion

Based on the current demand trends in the market, India Pesticides expects to stabilise growth rates and improve EBITDA margins to over 31% in the upcoming quarters. They will continue to focus on R&D activities to launch new products and gain a better market share. Agrochemical manufacturers like IPL will continue to ensure enhanced food security in India and many countries across the globe. The company’s IPO is likely to attract significant investor participation due to its impressive financial track record and diversified portfolio.

Once it gets listed, India Pesticides Ltd will be directly competing with major players such as UPL, PI Industries, Rallis India, Sumitomo Chemical, Dhanuka Argitech, Bharat Rasayan, and many more. You can also check out our recent analysis of certain fertilizers and agrochemical companies here.

Before applying for the IPO, we will wait to see if the portion reserved for institutional investors gets oversubscribed. The issue was subscribed 1.29 times on the first day of bidding (June 23). The portion reserved for retail investors was subscribed 2.51 times, and that of Non-Institutional Investors (NIIs) was subscribed 19%.

What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.