Insecticides India –

Q2 FY 25 results and concall highlights –

Revenues – 627 vs 696 cr, down 10 pc
Gross Margins @ 31 vs 25 pc
EBITDA – 90 vs 82 cr, up 9 pc ( margins @ 14 vs 12 pc )
PAT – 62 vs 53 cr, up 16 pc

Product wise sales breakup –

Insecticides – 61 vs 49 pc
Herbicides – 21 vs 34 pc
Fungicides – 15 vs 13 pc
Biologics – 4 vs 4 pc

Sales breakup by segment –

B2C – 84 vs 71 pc
B2B – 14 vs 26 pc
Exports – 2 vs 3 pc

Premium products : Plain generic product sales in B2C segment @ 64 : 36 vs 61 : 39 YoY ( this is a healthy sign )

Manufacturing footprint –

2 – Active ingredients plants
6 – Formulation plants
1 – Biologics plant
4 – R&D centers

Company’s product basket –

Herbicides – 34 products
Insecticides – 51 products
Fungicides – 13 products
Biologics – 11 products

Some of company’s leading brands include –

Lethal – Anti-Termite ( a leading, 37 yr old brand )
Shinwa – Insecticide ( in-licensed from Nissan )
Torry – Herbicide
Hachiman – Herbicide ( in-licensed from Nissan )
Pulsor – Fungicide ( in-licensed from Nissan )
Green Label – Herbicide
Hercules – Insecticide
Mission – Insecticide

Excessive rains in Q2 led to a lot of spraying opportunity losses in Q2. However, the reservoir levels are very healthy which should mean a good Rabi season

At present, company has 11 Focus Maharana products. These r high growth, high margin products ( mostly with Pan India presence ). Aim is to keep graduating more products from Maharatna to Focus Maharatna category. Maharatna products are currently smaller with regional presence. These Maharatna + Focus Maharatna products have gross margins > 40 pc vs 15 pc for plain vanilla generics

Expect to see descent pick up in B2B and Export sales in H2. B2C sales continue to remain strong

Sales return in Q2 was around 40 cr ( mainly herbicides ). Expecting sales return of another 10 cr ( mainly insecticides ) in Q3. Sales return is a normal phenomenon in the agrochemicals Industry

Inventory levels in the Mkt are at normal levels

According to the management, some of the AI prices have touched their 20-25 yr lows. They don’t foresee prices falling any further ( but with the Chinese dumping, one never knows – personal opinion )

In Q2, Maharatna + Focus Maharatna products witnessed a volume growth of 10 pc. Plain Generics witnessed a volume de-growth of 13 pc

As such, company’s focus is on premium products and they intend to keep increasing their share in the sales

Company is confident of growing both topline and bottomline in H2

Guiding for a flattish topline with double digit margins for full FY

LY exports for full FY were at 105 cr. This FY, company has already received orders worth 105 cr. More orders are likely to flow into the company. Basically – exports should do well in H2

Company has received a new exclusive In-Licensed product from Nissan. Likely launch should be in Mar-Apr 25

As the share of pure vanilla generics keep reducing YoY, company’s margins should keep inching up ( IMO – this can be a positive trigger for the company in medium term )

Have lined up 6 product launches for H2. Three of them are going to be Maharatna products

Dsic: holding, added more recently, biased, not SEBI registered, not a buy/sell recommendation

I agree, I have worked as a Product Owner in Fintech sector for long and some of these features are amazing. Also, the management seems forward thinking and adapting to rapidly changing technology.

I don’t have much info about competitors so unable to share deeper insights and would request if anyone has insights on same to please share.

Here are some of calculations:

Current PE-114, Profit ( TTM) ( Sep ’23 – Sep’24)–50 Crores, Market Cap– 5700 Crores

FY’25( Projections based on Management Commentary)
Profit – 85 Crores, PE- 100, Market Cap—8500 Crores

FY’26 ( Projections based on Management Commentary)
Profit– 150 Crores ( 80% growth over FY’25), PE- 70, Market Cap— 10,500 Crores

FY’27 ( Projections based on Management Commentary)
Profit — 240 Crores ( 60% growth over FY’26), PE- 60, Market Cap— 14,400 Crores

What are the flaws in this projection?

I feel considering industry tailwinds and strong management this is doable.

Hi Bhavnesh

I think the numbers reported are for Annapurna Swadisht only and it does not include the revenue from Madhur Confectionaries.

Please see the below screenshot from the financial results page no. 7:-

The business rather has shown great growth and once the revenue from Madhur Confectionaries starts getting included the growth will be tremendous.

Please correct me if i am wrong.

Thanks

With the recent actions of RBI where they have asked NBFCs to stop business because of charging high rate of interest (among few other reasons) … Isn’t charging such high rate of 20%+ from micro enterprises may also land up NBFCs like UGRO in the same situation.

And in case they will charge less, and cost of fund at such 10% level … ROA will get hit, and accordingly the ROE.

URGO being next Five-Star … seems similar to the story of IDFC First being next HDFC Bank.