India Pesticides IPO: All You Need To Know
Workers harvest Habanero chiles in Merida, Mexico. Photographer: Susana Gonzalez/Bloomberg

India Pesticides IPO: All You Need To Know

India Pesticides Ltd. will launch its three-day initial public offering on Wednesday as the herbicides to active pharmaceutical ingredients maker aims to net funds for its working capital requirements.

The maiden offer of the 37-year-old firm comprises a fresh issue of up to Rs 100 crore and an offer-for-sale worth up to Rs 700 crore, according to its red herring prospectus. The price band is set at Rs 290-296 apiece, implying a market capitalisation of Rs 3,342–3,409 crore.

Issue Details

  • Issue opens on – June 23.

  • Issue closes on – June 25.

  • Issue Size – Up to Rs 800 crore.

  • Bid lot - 50 shares and multiples thereof.

Objectives

Proceeds from the issue will be used for funding working capital requirements to the tune of Rs 80 crore and the balance, if any, will be used for general corporate purposes.

Business

The company is the sole producer of five technicals in India and is among the leading manufacturers globally for fungicides Captan and Folpet and thiocarbamate herbicide, in terms of production capacity.

It has diversified into making herbicides and fungicide technicals and formulations, and APIs—or the raw materials for making drugs.

Its business verticals include:

  • Technicals – Fungicides, herbicides.

  • Formulations - Formulations of insecticides, fungicide and herbicides, growth regulators and acaricides.

  • APIs.

The company has two manufacturing units at Lucknow and Hardoi in Uttar Pradesh. As on March 31, their aggregate installed capacity for agro-chemical technicals and formulations was 19,500 million tonnes and 6,500 MT, respectively.

India Pesticides has also commenced construction of two manufacturing units proposed to be used for herbicide technicals. Its customer base comprises multinational, regional and local companies, including crop protection product manufacturing companies like Ascenza Agro, S.A., Conquest Crop Protection Pty., Sharda Cropchem Ltd., Syngenta Asia Pacific Pte., Stotras Pty. and UPL Ltd.

Financials

The company’s revenue nearly doubled in the last three financial years, while profit more than trebled. The company attributed it to better yield and optimal plant utilisation. With the current demand scenario, the company expects to stabilise growth rate, and improve margins to over 31% in the coming quarters.

Competition, Risks

India Pesticides faces competition from domestic and global manufacturers under different product categories.

While its domestic competitors include PI Industries Ltd. and Jubilant Lifesciences Ltd., in the international market it faces competition from the likes of China National Corp., Sumitomo Chemicals Co. and BASF SE in agro-chemicals.

Some of its competitors in the agro-chemical industry, according to Axis Capital, may have greater financial resources, technology, research and development capability, greater market penetration and operations in diversified geographies and product portfolios, which may allow their competitors to better respond to market trends.

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