India Pesticides IPO opens for subscription on June 23; Here are key things to know

India Pesticides will open its initial public offering (IPO) for subscription on Wednesday, June 23. The agrochemical firm is an R&D driven manufacturer of technicals with a growing formulations business and is one of the fastest-growing companies in terms of volume of technicals manufactured.

The Rs 800-crore public issue will open on June 23 and close on June 25.

The issue includes a fresh issue of shares worth Rs 100 crore and an offer for sale of shares worth Rs 700 crore by promoters and shareholders. Shares worth Rs 281.4 crore will be sold by promoter Anand Swarup Agarwal and Rs 418.6 crore by other selling shareholders.

The price band for the issue, which will close on June 25, has been fixed at Rs 290-296 per share.

The market lot size is 50 shares. A retail-individual investor can apply for up to 13 lots (650 shares or Rs 192,400).

Of the total issue size, up to 50 percent of the offer will be available for allocation to qualified institutional buyers, up to 15 percent for non-institutional bidders and the remaining 35 percent for retail individual bidders.

The net proceeds from the fresh issue will be utilised for working capital requirements (Rs 80 crore), and general corporate purposes, while the offer for sale money will go to selling shareholders.

The shares are likely to be listed on July 5.

Axis Capital and JM Financial are the book-running lead managers to the issue.

India Pesticides R&D driven agrochemical manufacturer of Technicals with a growing formulations business. The company has recorded 37.17 percent year-on-year growth in Technicals manufacturing (by volume) between Fiscal 2020 and Fiscal 2021. It is the sole Indian manufacturer of five Technicals and among the leading manufacturers globally for Captan, Folpet and Thiocarbamate Herbicide, in terms of production capacity.

The company is also diversified into manufacturing herbicide and fungicide Technicals and active pharmaceutical ingredients (APIs). It also manufactures herbicide, insecticide and fungicide Formulations.

India Pesticides currently has two manufacturing facilities located at Lucknow and Hardoi in Uttar Pradesh. As of March 31, 2021, the aggregate installed capacity of their manufacturing facilities for agro-chemical Technicals was 19,500 MT and Formulations was 6,500 MT. It has also commenced construction of 2 manufacturing units which are proposed to be used for herbicide Technicals.

As of March 31, 2021, the company’s Technicals are exported to over 25 countries. The revenue generated from exports contributed to 56.71 percent of their revenue in Fiscal 2021.

Strong R&D and product development capabilities

A diversified portfolio of niche and quality specialized products

Long-term relationship with key customers

Advanced manufacturing facilities with a focus on the environment, health and safety

Strong sourcing capabilities and extensive distribution network

Consistent track record of financial performance

Experienced promoters and strong management team

India Pesticides registered a consistent revenue and profitability growth over the last three fiscals. Its revenue from operations increased by 90.48 percent during FY19-FY21.

Technicals are primarily exported and revenue generated from these exports contributed to 56.71 percent of revenue from operations in FY21.

Anand Swarup Agarwal and the ASA Family Trust are the promoters of the company. They hold a 46.97 percent pre-offer equity stake in the company. The total shareholding of promoter and promoter group is 82.68 percent.

Anand Swarup Agarwal is the Chairman and non-executive Director of the company.

Rajendra Singh Sharma is a whole-time Director of the company. Rahul Arun Bagaria is the Non-Executive Director, while Adesh Kumar Gupta, Mohan Vasant Tanksale, and Madhu Dikshit are Independent Directors of the company.

Dheeraj Kumar Jain is the Chief Executive Officer of the company, while Satya Prakash Gupta is the Chief Financial Officer of the company.

The IPO has been priced at the PE levels of 24.5 times at a higher band of the price range of Rs 296. The company’s overall fundamentals look very attractive and certain analysts have a positive outlook on the IPO.

"As for its technical product, the company is globally cost-competitive which helps the company in posting superior margins. With the company’s focus on increasing its product portfolio, expanding geographical presence, onboarding more customers for newer molecules apart from molecules that are under implementation &  already lined up as some of them will be going on stream sometime in Sept /Oct , future prospects of the company looks strong," said Hem Securities.

The brokerage firm recommends “Subscribe” on the issue both for listing gain and long-term purpose.