Nath Bio-Genes (I) Ltd Initiating Coverage Report By SMIFS

Nath Bio-Genes (I) Ltd: On the cusp of growth

We initiate coverage on Nath Bio-Genes(I) Ltd (NBL) with a Strong Buy rating. NBL is an R&D driven company engaged in the business of production, processing, and marketing of hybrid and genetically modified (GM) seeds. The company has sowed the seeds of R&D and is now focusing on marketing and distribution to achieve the desired heights. It has also raised INR136 Crore through QIP and has repaid its outstanding loans. We believe these holistic approach would add vigor to the company’s performance and help it grab a decent market share in the Indian seed Industry.

#CorporateView | Certain parts have seen delay in rains & deficient rainfall but things are improving. Doing well in cotton and rice, expectgrowth in range of 20-25% this year, says Nandkishor Kagliwal of Nath Bio-Genes@avannedubash @AyeshaFaridi1 pic.twitter.com/dulOD6Uhwi

— ET NOW (@ETNOWlive) July 16, 2018

Investment Rationale Highlights

– Presence across the value chain
– Production adheres to stringent quality parameters
– Strong Research & Development
– Balanced & diversified products portfolio
– Focus on marketing and distribution
– Pan India presence
– Added the best talents from the Indian seed Industry
– QIP capital will aid the company in reducing debt and
in improving working capital
– Pledged shares released by ARCIL

Valuation: The company is now at an Inflection Point where it has superior products in its basket and is ready to market it. The company has a strong pipeline in each of the verticals for the next 3-4 years, with this we believe that strong marketing and distribution network will drive revenue. Considering this, we value the company on the basis of weighted average of P/E and EV/EBITDA and arrive at a Price Target of INR759.