Cmp-393 Rs
Insecticides India Ltd engaged in the manufacturing and marketing of crop-protection products. Company manufactures and sells four product categories: Insecticides, Herbicides, Fungicides, Biologicals and Plant Growth Regulators (PGRs).
Key Highlights-:
- 8 Patents Received
- 21 Patents Pending
- 59+ New Processes Developed
- 60+ Scientists in R&D Centres
Insecticides India Ltd made a modest foray into Indian Agriculture Space in 2002. Today it is one of the premier names in Crop Protection Industry with more than 120 formulation products and 15 technical products, Insecticides (India) manufactures all types of insecticides, weedicides, fungicides and PGRs for all types of crops and household. The company is committed to fortify Agriculture with a highly productive and progressive vision and mission to make Indian Farmers prosperous.
Insecticides (India) deploys 7 State of the art ultra-modern production facilities with world class automated machineries for the formulation and technical synthesis of agro chemicals.
With 5 state-of-the-art ultra-modern Formulation plants, 2 multi stream Technical Plants and 24 depots spread across the length and breadth of the country, make it possible to make the products reach to its end consumers.
Another feather in the cap is the state of the art R&D facility in India, in Joint Venture with a Japanese company OAT Agrio Co., Ltd. with an objective to invent new agro chemical molecules for India and global markets.
Its Formulation Plants are situated at Chopanki (Rajasthan), Samba( J&K), Udhampur (J&K) and Dahej (Gujarat) and Technical Synthesis plants are at Chopanki (rajasthan) and Dahej (Gujarat).
Its formulation plants are equipped with fully automatic lines churning out the best quality products with minimum human contact. Regular checking, strict quality control, immediate corrective action and management review system is a part of its routine operations to ensure that no product leaves the premises without a quality assurance. Latest automatic packaging machines are installed to make the products reach the farmers safely and with quality maintained.
As a responsible company, the plants are complaint to ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 certifications to ensure customer satisfaction through quality management system, environmental protection and occupational health and safety in and around units.
Insecticides (India) Limited is able to manufacture 10 different streams of products simultaneously with two technical synthesis plant at Chopanki (Rajsthan) and Dahej (Gujarat).
With expansion at Samba and Dahej plant and a new green Field project coming up in Chopanki, Insecticides (India) is poised to become one of the largest formulation facilities with a total combined manufacturing facility of 75000 Mts per annum.
Insecticides (India) takes pride in mentioning that one of the major strength is the channel partners which include about 4800 distributors and 60000 dealers, who have always formed the face of the company and played a vital role in smooth operations of the company.
Compan’s Tractor Brand Range of products like Lethal, Victor, Thimet, Monocil, Nuvan, Xplode, Hijack, Pulsor and Hakama are the choicest brands of every farmer.
COLLABORATION
In order to provide the latest technology to its customers, Insecticides (India) strives to bring out the latest technology in collaborations and Tie ups with leaders in the international market.
Company’s International Tie ups Include Nissan Chemical Industries Limited, Japan for products like Pulsor and Hakama and technical collaboration with AMVAC, USA for Products like Thimet and Nuvan corroborate our efforts to make agriculture rewarding for Indian Farmers.
Technical Collaboration with AMVAC, USA for Thimet and Nuvan
Insecticides (India) has a technical collaboration with American Vanguard Corporation, USA for manufacturing and marketing the Leading international brands Thimet and Nuvan in India.
Marketing Tie Up with Nissan, Japan
Insecticides (India) has a proud tie-up with the Japanese Major, Nissan Chemical Industries Ltd., to market the patented molecule Pulsor & Hakama.
Insecticides (India) signed a JV with OAT Agrio Co., Ltd of Japan for setting up a R&D Centre in India with an objective of inventing new agrochemical molecules in India for the international market. This state of the art centre with all latest and modern infrastructure, has been recently inaugurated and is fully operational.
Insecticides (India) has signed an agreement with National Research Development Corporation, an Enterprise of Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India (NRDC) for processing and commercialize MNIO, an import and intermediate substitute of Thiamethoxam.
FINANCIALS
Q3 FY2020 started on a positive note for agrochemicals sector as the sowing period extended to October and demand picking up during Rabi season. There were late rains in some parts of the country, where sowing has been delayed a bit, but output in general is expected to be better due to optimum moisture content in the soil
Higher contribution from Maharatna products which registered 112% growth y-o-y and total branded sales increased by 70%, contributing 75% to the total sales.
Higher realization in the Maharatna categories driven by successful recently launched products such as Hercules, Sofia, Xplode, Encounter and Hakama.
Profitability during the quarter was impacted due to fair valuation of inventory and lower margins from Institutional Sales.
Company recorded revenue from operations of Rs. 263 crores in Q3 FY2020, representing a growth of 21.8% on a Y-o-Y basis. Revenue growth was primarily driven by branded sales which grew 70% on a Y-o-Y basis contributing 75% to Total Sales and was partially offset by decline in Institutional Sales and Exports. The Company delivered EBITDA of Rs. 23 crores in Q3 FY2020, a decline of 28.2% with margins of 8.7%. Net profit for the quarter was Rs. 9 crores, a decrease of 49.0% with margins of 3.3%.
R&D
Insecticides (India) have always strived hard to come out with best quality products in the reach of farmers. This aggression has lead Insecticides (India) to become one of the very few companies who have taken research and development on their prime agenda. Insecticides (India) have a state of the art In House Research and Development Centre at Chopanki in Rajasthan. This ultra-modern facility equipped with latest equipments and instruments is approved by DSIR, Ministry of Science and Technology.
The QC laboratories are NABL accredited and on its way to get GLP certification shortly. Experienced and competent team of scientists and research experts have met success in developing environment friendly formulations like Soluble Concentrates (SC), Emulsion in Water (EW), Wettable Dispersible Granules (WDG). More than 15 new processes have been developed for various technical and four of them have been applied for the process patents.
The urge of associating the name of Insecticides (India) with invention, the company has entered into a JV with a Japanese company, OAT Agrio Co., Ltd. (Formally known as Otsuka Agritechno Co. Ltd.). The JV has set up a dedicated R&D Facility in India with an objective of inventing 4-5 agrochemical molecules in next 5 years for international requirements. This R&D centre has been recently inaugurated and fully operational.
CONCLUSION
With annual sales of more than Rs 1000 Cr and Operating profit margins of 16% company is available at the Price to earnings of 6.6PE.
Although company has somewhat debt on the balance sheet but looking at the overall debt to equity ration of 0.40 it is easily manageable .
However the company does have cash flow concerns as operating cash flow is highly volatile with even negative operating cash flow in some years.
Company has a steady ROCE of in range of 16-20% which is a very good factor.
Company has shown good growth with compounded sales growth of about 9% over 3 and 5 year period and net profit growth rate of the company has shown significant performance of about 46% and 25% over 3 and 5 year period respectively.
Above all it is a good company to explore for more information as further analysis could help investors learn a lot from this company. On a personal note us being somewhat religious we would not considering investing in this stock particularly even though it shows great growth prospects looking at the fundamentals since the company is engaged in the business of pesticides which are basically used in killing large number of insects. To that some may even argue that aren’t we all eating vegetables which are after all grown with the help of fertilisers? Well to that we would like to tell you that it all depends upon ones own individual perspective. It is our view , users are open to have their own but please do not send unnecessary queries regarding this.
FUTURE PROSPECTS
Exports to offer huge growth potential The company is also looking at the exports market as it sees huge potential in this segment. Currently, exports stand at ~Rs350-400mn. Management is confident of doubling the exports by next year, as global innovators are scouting for new partners outside China due to stringent environmental regulations and rising costs there.
Good analysis. Appears that this is a good company with prominent future potential
As per today’s analysis by leading brokerage house, Insecticides will be impacted due to imports from China, with this view do you suggest to book profit in this stock or still continue to hold for more upside….
The stock had already given gains of 35% since suggested . We do from time to time advise users to keep partial profit booking at desired levels and mostly importantly always have capital back after certain gains.