India Pesticides makes strong debut, lists at 22% premium over issue price


India Pesticides made a strong debut on the bourses on Monday as its shares got listed at Rs 360, commanding a 22 per cent premium over the issue price of Rs 296 on the BSE. Post listing, the inventory extended its gains and moved higher to Rs 368, a 24 per cent hop against its issue price.

At 10:01 am, India Pesticides was once trading at Rs 366.70, 2 per cent higher from its opening level on the BSE. In comparison, the S&P BSE Sensex was once up 0.59 per cent at 52,792 points. Around 770,000 shares had changed hands on the BSE till the time of writing of this outline.

The Rs 800-crore initial public offering (IPO) of India Pesticides saw a strong response from investors with the issue getting subscribed 29 times. The portion reserved for retail investors was once subscribed 11.30 times while the non-institutional investor category got 51.88 times. The qualified institutional buyer category was once subscribed 42.95 times.

India Pesticides operates in two commerce verticals, viz. technicals and formulations. Further, it’s the sole Indian manufacturer of the technicals which are exported to over 25 countries and the revenue generated from exports contributed to 56.71 per cent of the revenue from operations in FY21. The company has a diverse customer base and a powerful R&D and product development capabilities.

“Over the next five years, around $4.2 billion worth of technicals are expected to go off patent. Since India Pesticides caters to the generic market, this augurs polite for future growth. The company has overall eight technicals under its portfolio currently, which is expected to increase to 16 over the next three years. It has been expanding technicals capacity by 10,000 MT with a complete capex outlay of Rs 140 crore deliberate in the next two years. This would aid revenues for the coming years for the reason that asset turn is estimated to be around 3 times for the forthcoming expansion,” ICICI Securities said in an IPO note.

India Pesticides’ financial performance has been slightly impressive on all counts as polite. While its revenue and Ebitda (earnings before interest, taxes, depreciation, and amortisation) recorded 37 per cent and 48 per cent CAGR, respectively through FY18-FY21, its net profit recorded a stellar 60 per cent CAGR over the same period.

Further, its balance sheet has been comfortable with least leveraging and it has turn into a net cash company in FY21. The operating cash go with the flow (OCF) and free cash go with the flow (FCF) generation have been stable with cumulative OCF and FCF of Rs 170 crore and Rs 80 crore, respectively over FY18-FY21.

“The company has a robust track record of performance and has been generating positive cash go with the flow. We are positive on the long-term prospects of the company. Going forward, with the deliberate expansion and lowering debt, we are also self-assured that company will deal with the growth levels which is mirroring in the pricing of the IPO,” said brokerage Anand Rathi in an IPO note.

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