Insecticides India up 3% in weak market; hits 52-wk high on healthy outlook

For FY23, the management expects the top line to grow by a double digit, mainly driven by expansion of facilities, addition of new generation products and significant number of product registrations.

Shares of Insecticides (India) (IIL) hit a 52-week high of Rs 937 on gaining 3 per cent on the BSE in Wednesday’s weak trade. The uptick came on the back of a healthy business outlook.

With this, the stock of the pesticides & agrochemicals company inched towards its all-time high level of Rs 966 hit on September 14, 2017. In comparison, the S&P BSE Sensex was down 0.45 per cent at 53,644 points at 01:14 PM.

IIL provides farmers with a range of products for their crop protection requirements. It also owns the prestigious “Tractor Brand” which has gained great popularity in the farming community. Last week, IIL said that the government had granted the company a patent for an invention titled Novel Fungicidal Carbamate Compounds for 20 years from January 29, 2018 (date of filing).

In the past six months, IIL has outperformed the market by surging 43 per cent as against an 8 per cent decline in the Sensex, after it reported healthy earnings for the quarter and financial year ended March 2022.

In FY22, the company’s revenue from operation grew 5.9 per cent year on year (YoY) to Rs 1,504 crore mainly driven by the institutional sales segment and more than 2 times growth in export turnover. Net profit rose 14.5 per cent to Rs 107 crore YoY, while Ebitda margin improved 55 bps to 11.28 per cent over FY21.

For FY23, the management expects the top line to grow by a double digit, mainly driven by expansion of facilities, addition of new generation products and adding significant number of product registrations in the current fiscal. The new generation products will not only help in top line growth but also help in margin accretion, the management said.

The management expects the Ebitda margins to improve by 100 bps in FY 23 from 11.28 per cent in FY22 attributable to better product mix, cost optimization measures and backward integration for certain raw materials. The management has a target of achieving more than Rs 200 crore of revenue through exports.

This will be achieved by penetrating in new geographies, obtaining a higher number of product registrations in existing countries & adding new relationships with overseas players through contract manufacturing. The management expects to launch 5 to 6 new generation products in FY23, the management said.

Meanwhile, the agrochemicals industry has been fairly buoyant led by normal monsoons and remunerative prices, all of which has resulted in an acceleration in agricultural activities.

The industry is expected to grow at a higher rate in the coming years. The Indian Meteorological Department and other similar agencies have predicted normal monsoon in 2022. Considering this and the initiatives taken by the government for farmers and farming, positive changes in domestic and export policies coupled with global market situation, the overall outlook for the Indian agrochemical industry remains positive, according to analysts.