INDIA PESTICIDES-IC by JM Financials

23 August 2021
INDIA | CHEMICALS | COVERAGE INITIATION
INDIA PESTICIDES
AN AFFORDABLE PLAY ON PESTICIDE EXPORTS
India’s crop protection IPL’s revenue/PAT CAGR Initiate with BUY &
chemical exports to post expected to come in at TP of INR 395/share,
8% CAGR over CY19-24E 16%/18% over FY21-24E implying 26% upside
23 August 2021
INDIA | CHEMICALS |
COVERAGE INITIATION
TABLE OF CONTENTS
Introduction 3
Focus Charts 4
Investment Thesis 5
Company Background 8
Industry Overview 10
Capacity Expansion & Launch of new products 13
Raw Materials 14
Financials 15
Valuation 16
Key Risks 16
Board of Directors 18
Financial Tables 20
We believe IPL is an affordable play on India’s rising agrochemical

exports due to a) its focus on R&D to develop generic agrochemical
Technicals; b) high asset turns due to raw material synergies and its
relatively lower capex (partly on lower lands cost in UP compared with
other parts of India).
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23 August 2021
INDIA | CHEMICALS|
COVERAGE INITIATION
India Pesticides Limited

Affordable Play on Pesticide Exports
India becoming a preferred export destination for agrochemicals: India
India Pesticides Limited (IPL) is among the fastest growing agro- is emerging as an export destination given its cheaper manufacturing
chemical companies in India in terms of volume. It is the sole costs, skilled labour, research and development expertise, chemistry
manufacturer in India and among the top 5 manufacturers capabilities and environmental, health and safety compliances. In
globally for several Technicals such as Folpet and Thiocarbamate addition to exports to the top 8 countries (United States, Brazil, France,
Herbicide. Japan, Australia, Belgium, China and Netherlands), which contribute
approximately 50% to total agrochemical exports from India,
IPL has developed strong and long-term relationships with manufacturers could also explore countries in Southeast Asia, Latin
various multinational corporations; this has helped it expand its America, Middle East and Africa.
product offerings and geographic reach for its Technicals
India’s crop protection chemicals exports to register 8%CAGR over
business. Several of its customers have been associated with the CY19-24E: India was the world’s third largest pesticide exporter by
company for over 10 years and some key customers include volume in 2018. India’s exports of crop protection chemicals registered
crop protection majors such as Syngenta Asia Pacific Pte. Ltd ~9% CAGR over CY15-19. The actual export contribution of crop
and UPL Limited. protection chemicals was 50% of total domestic production (by value)
in CY19. In CY24, exports are expected to reach USD 3.1bn,
Since 2018, IPL’s R&D efforts have resulted in the development contributing 55% to total domestic production, which is expected to
of processes for products that are not highly toxic. It has also led be valued at USD 5.7 bn.
to commercialisation of 3 Technicals, the sales of which
contributed 11.9%, 39.4% and 42.1%, respectively to its Revenue/PAT CAGR expected at 16%/18% over FY21-24E with
industry-best EBITDA margins: IPL is likely to post revenue/PAT CAGR of
revenue from operations in FY19, FY20 and FY21.
16%/18% over FY21-24E on the back of capacity expansion of existing
We forecast sales, EBITDA and EPS to post 16%, 16%, and Technicals and launch of new high-value Technicals. IPL has industry-
18% CAGR, respectively, over FY21-24E. We expect the best EBITDA margins, which are likely to sustain at 28-29% in FY22-
24E aided by of a) positive operating leverage; b) raw material synergy;
company’s ROCEs (pre-tax) to remain above 35% over FY22-24.
and c) the launch of new high-value products.
We initiate coverage on IPL with a BUY rating and Sep’22 TP of
INR 395/share (based on 22x Sep’23E EPS), implying 26% Initiate with BUY and TP of INR 395 per share: We believe IPL is an
upside. Key risks: High client concentration, seasonality, affordable play on India’s rising agrochemical exports due to a) its focus
unfavourable local and global weather patterns and high on R&D to develop generic agrochemical Technicals; b) high asset turns
dependency on R&D. due to raw material synergies and its relatively lower capex (partly on
lower lands cost in UP compared with other parts of India). We initiate
with BUY and Sep’22 TP of INR 395/share.
Recommendation and Price Target Financial Summary (INR mn)

Current Reco BUY Y/E March FY20A FY21A FY22E FY23E FY24E
Current Price Target (12M) 395 Net Sales 4,796 6,490 7,393 8,532 10,069
Upside (%) 26% Sales Growth (%) 40.8 35.3 13.9 15.4 18.0
EBITDA 1,037 1,895 2,055 2,448 2,955
EBITDA Margin (%) 21.6 29.2 27.8 28.7 29.3
Key Data – IPL IN Adjusted Net Profit 708 1,345 1,568 1,838 2,191
Current Market Price INR314 Diluted EPS (INR) 6.4 12.1 14.0 16.4 19.6
Market cap (bn) INR36.2/US$0.5 Diluted EPS Growth (%) 61.2 90.0 16.2 17.2 19.3
Free Float 100% ROIC (%) 29.6 43.1 33.5 28.9 27.6
Shares in issue (mn) 111.8 ROE (%) 31.9 41.6 30.5 25.3 23.9
Diluted share (mn) 111.8 P/E (x) 49.4 26.0 22.4 19.1 16.0
3-mon avg daily val (mn) P/B (x) 13.6 9.0 5.5 4.3 3.4
52-week range 368/301 EV/EBITDA (x) 34.0 18.5 16.4 13.7 11.1
Sensex/Nifty 55,329/16,451 Dividend Yield (%) 0.0 0.1 0.2 0.3 0.3
I INR/US$ 74.4 Source: Company data, JM Financial. Note: Valuations as of 20/Aug/2021
Price Performance JM Financial Research is also available on: Bloomberg - JMFR <GO>, Thomson Publisher & Reuters, S&P Capital IQ,
% 1M 6M 12M FactSet & Visible Alpha
Absolute -11.8 0.0 0.0 You can also access our portal: www.jmflresearch.com
Please see Appendix I at the end of this report for Important Disclosures and Disclaimers and Research Analyst Certification.
Relative* -14.8 0.0 0.0
*To the BSE Sensex Krishan Parwani Dayanand Mittal We acknowledge the support
krishan.parwani@jmfl.com dayanand.mittal@jmfl.com of Prashanth Kamath in the
Tel: (91 96) 62095500 Tel: (91 96) 19388870 preparation of this report

India Pesticides Limited 23 August 2021
Focus charts
Exhibit 1. Global agrochemicals market to witness a 6.6% CAGR over Exhibit 2. India crop protection export market to register an 8%
CY19-24E (USD Bn) CAGR over CY19-24E (USD Bn)
100.0 6.0 5.7
86.0 5.7
4.2
75.0 4.5
3.1
62.5 3.2
48.6 2.1
50.0 3.0
1.5
1.5
25.0 2.6
2.1
1.7
0.0
0.0 CY14 CY19 CY24E
CY14 CY19 CY24E Domestic Export
Source: IPL DRHP Source: IPL DRHP
Exhibit 3. IPL likely to deliver 16% revenue CAGR over FY21-24E Exhibit 4. Exports are likely to remain ~70% of overall sales
12,000 60% 100%
30% 30% 30%

38% 43%
9,000 45% 75% 50%
6,000 30% 50%
70% 70% 70%

62% 57%
3,000 15% 25% 50%
0 0% 0%
FY19 FY20 FY21 FY22E FY23E FY24E FY19 FY20 FY21 FY22E FY23E FY24E
Revenue from operations (INR mn) YoY growth (RHS) (%) Export Sales Domestic Sales
Source: Company, JM Financial Source: Company, JM Financial
Exhibit 5. IPL’s ROE likely to remain above ~23% Exhibit 6. IPL’s technical sales likely to remain at 79-80%
44 41.6 100%
25% 20% 21% 21% 21% 21%
31.9 75%
33 30.5
26.5
25.3
23.9
22 50%
75% 80% 79% 79% 79% 79%
11 25%
0 0%
RoE Technicals Formulations


Investment Thesis
India is emerging as an export destination given its cheaper manufacturing costs, skilled
labour, R&D expertise, chemistry capabilities and environmental, health and safety
rd
compliances. India was the world’s 3 largest pesticide exporter by volume in 2018. Over
CY19-24E, India’s exports of crop protection chemicals are likely to register an 8% CAGR.
We estimate IPL to post revenue/PAT CAGR of 16%/18% over FY21-24E on the back of
capacity expansion of existing technicals and the launch of new high-value technicals. We
believe IPL is an affordable play on India’s rising agrochemical exports due to: a) its focus on
R&D to develop generic agrochemical technicals; b) its high asset turns due to raw material
synergies and its relatively lower capex (partly on lower lands cost in UP compared with other
parts of India). We initiate with a BUY and Sep’22 TP of INR 395/share (based on 22X
Sep’23E EPS).
 Capacity expansion and launch of new products to pave way for future growth: IPL has
two manufacturing facilities - Dewa Road and Sandila. Over the past few years, it has
grown on the back of phase-wise capacity expansion at its newer Sandila facility. Since
2018, three new technicals have been commercialised and these contributed to 39.4% of
FY20 revenue. IPL has completed this expansion with minimal debt (INR 300mn at end-
FY20) on its books. Capacity for technicals at its Sandila facility at end-FY21 stood at
17,400 MTPA, which the company intends to expand to 23,400 MTPA by FY23E and
25,000 MTPA by FY24E. It has already started construction of two manufacturing units
for herbicide technicals at Sandila. Further, IPL is currently in the process of developing
processes for 8-10 technicals, including 2 fungicides, 2 herbicides, 2 insecticides, and 2
intermediates, which could serve as growth drivers for the next few years. During the
1QFY22 post-earnings conference call, management highlighted that it has been allotted
rd
25 acres land for its 3 facility at a cost of INR 250mn-300mn. The company is soon
slated to apply for environment clearances for this facility. The envisaged capex for this
facility is INR 3bn-3.5bn over FY23-25.
Exhibit 7. IPL - capacity and utilisations rising Exhibit 8. IPL’s average realisations growing steadily
40,000 82% 400 373
352
329 338
324
308
296
30,000 78% 300
20,000 74%
200
10,000 70%
100
0 66%
FY19 FY20 FY21 FY22E FY23E FY24E
0
FY18 FY19 FY20 FY21 FY22E FY23E FY24E
Total Installed Capacity (MT) Total Actual Production (MT)
Capacity Utilisation (RHS) (%) Average Realisation on Prodution (INR/Kg)


 Strong R&D and product development capabilities: Since 2018, IPL’s R&D efforts have
resulted in the development of processes for products that are not highly toxic. It has also
led to commercialisation of 3 technicals, the sales of which contributed 11.9%, 39.4%
and 42.1%, respectively to its revenue from operations in FY19, FY20 and FY21. The
company is currently in the process of developing processes for certain technicals,
including 2 fungicides, 2 herbicides, 2 insecticides and 2 intermediates. The company has
also commenced construction of 2 manufacturing units at its facility in Sandila; these are
proposed to be used for herbicide technicals. In 1QFY22, 2 technicals (one herbicide and
one fungicide) were launched. Sales of these new technicals should start contributing
meaningfully by 4QFY22. The company’s plan to add 6 new products by the next fiscal
year remains intact.
 Diversified portfolio of niche and quality specialised products: As a result of its extensive
R&D efforts, the company has, over the years developed a niche portfolio of agro-
chemical products. The company has diversified its product portfolio over the years and
has grown into a multi-product manufacturer of formulations, herbicide and fungicide
technicals and APIs. The company has obtained registrations and licences to manufacture
from the CIBRC and the Department of Agriculture, Uttar Pradesh for 22 agro-chemical
technicals and 124 formulations for sale in India and 27 agro-chemical technicals and 34
formulations for exports. Its technicals portfolio comprises over 8 export-grade herbicides,
fungicides and APIs, as of 30Sep’20. Its formulations business includes a variety of
herbicides, fungicides and insecticides and includes over 30 products, as of 30Sep’20 that
it sells primarily in India. Its diversified product portfolio allows for limited dependence on
individual products and helps counter seasonal trends that are, in particular, a challenge
for the agriculture industry in India. The company is also the sole Indian manufacturer and
among top 5 globally for several complex technicals including, Folpet and Thiocarbamate
Herbicide.
 Key customers include crop protection majors: IPL’s customer base currently comprises a
number of multinational, regional and local companies, such as, Ascenza Agro, S.A.,
Conquest Crop Protection Pty Ltd, Sharda Cropchem Limited, Syngenta Asia Pacific Pte.
Ltd., Stotras Pty Ltd and UPL Limited. In FY18, FY19, FY20, and FY21, its top 10
customers represented 43.8%, 54.4%, 58.6% and 56.8%, respectively, of its total
revenues from operations. IPL’s largest customer represented 22.5%, 29.6%, 16.8% and
19.2% of its total revenues from operations in similar periods.
 Strong ROE and ROCEs of 25-30% are likely to sustain: IPL has been able to generate
exceptional ROE and ROCE (pre-tax) of 31.9% and 37.2%, respectively in FY20 mainly
due to a) its lower capex compared with industry players partly on account of its internal
40 member project engineering team and lower land cost in UP compared with other
parts of India; b) higher asset turns due to raw material synergy; and c) higher EBITDA
margins. Hence, its ROCE (pre-tax) is likely to be 43.2%/37.7%/36.1% in
FY22E/FY23E/FY24E and ROE is likely to be 30.5%/25.3%/23.9% in FY22E/FY23E/FY24E.

Exhibit 9. IPL’s ROE likely to remain above ~23% Exhibit 10. IPL’s ROCE (pre-tax) likely to remain above ~35%
44 41.6 60
55.3
31.9 43.2
33 30.5 45
37.2 37.7
26.5 36.1
25.3
23.9
30.5
22 30
11 15
0 0
RoE RoCE (pre-tax)
 Two Technicals launched in 1QFY22; six more to be added by FY23: In 1QFY22, IPL
launched 2 new technicals (one herbicide and one fungicide). In the 1QFY22 post-results
conference call, Management highlighted that sales of these new technicals would start
contributing meaningfully by 4QFY22. The company’s plan to add 6 new products by the
next fiscal year remains intact.
 No seasonality impact on the business: Management highlighted that the first half of the
year roughly makes up for ~52% of full-year sales. Hence, seasonality does not impact
the business much. Moreover, technical sales roughly contribute 75-78% to overall sales.
However, in 1QFY22, technical sales were ~70% as demand for formulations was high
from the domestic market. As a result, the company’s inventory levels increased. This is
expected to normalise after 2QFY22.

Company Background
IPL is an R&D driven agro-chemical manufacturer of technicals with a growing formulations
business. IPL is also the sole Indian manufacturer and among the top five manufacturers
globally for several technicals, such as, Folpet and Thiocarbamate Herbicide. Since
commencing operations, IPL has diversified into manufacturing herbicide and fungicide
technicals and active pharmaceutical ingredients (APIs). The company also manufactures
herbicide, insecticide and fungicide formulations.
The company has a strategic focus on R&D and its R&D capabilities include two well-
equipped in-house laboratories registered with the DSIR. Its efforts are led by a dedicated
R&D team, which has led to the development of processes to manufacture three generic off-
patent technicals since FY18. The company is currently in the process of developing processes
for certain technicals, including two fungicides, two herbicides, two insecticides and two
intermediates. The company has two distinct operating verticals:
1) Technicals
IPL manufactures generic technicals that are used in the manufacture of fungicides and
herbicides as well as APIs with applications in dermatological products. Certain key fungicide
technicals that the company manufactures include: i) Folpet, used to manufacture fungicides
that control fungal growth at vineyards, cereals, crops and biocide in paints; and ii)
Cymoxanil, used to manufacture fungicides that control downey mildews of grapes,
potatoes, vegetables, and several other crops. Major herbicide technicals the company
manufactures include Thiocarbamate herbicides that have application in field crops such as
wheat and rice and are used globally. The APIs that the company manufactures have anti-
scabies and anti-fungal applications.
Exhibit 11. Technicals (Fungicides & Herbicides) and APIs

Product Applications
Fungicides
Folpet Controls fungal grow th at vineyards, cereals, crops, biocide in paints.
Cymoxanil Controls dow ny mildew s of grapes, potatoes, vegetables and several other crops.
Addresses scab on apples, pears, peaches, almonds, apricots and cherries. Ziram is also used as an additive ingredient in
Ziram#
industrial adhesives and paint.
Captan# Controls fungal grow th on fruits, vegetables and cereals.
Herbicides
Thiocarbamate Herbicides Wheat and rice
APIs
Anti-scabies drug Dermatology - Used in the treatment of scabies and peduclosis.
Anti-fungal drug Dermatology - Fungicidal drug that acts on fungal hyphae and inhibits squalene epioxidase.
Source: IPL DRHP # Ziram and Captan are part of a list of 27 products that are proposed to be banned for sale in India by the Department of Agriculture, Government of India
2) Formulations
IPL manufactures and sells various formulations of insecticides, fungicide and herbicides,
growth regulators and Acaricides, which are ready-to-use products. As of 31Mar’21, the
company manufactures over 30 Formulations that include Takatvar, IPL Ziram27, IPL Dollar,
IPL Soldier and IPL Guru. IPL’s Formulations product portfolio is primarily sold domestically
through its extensive dealer network of dealers and distributors. The company has a diverse
customer base that includes crop protection product manufacturing companies, such as,
Syngenta Asia Pacific Pte. Ltd, UPL Limited, ASCENZA AGRO, S.A., Conquest Crop Protection
Pty Ltd, Sharda Cropchem Limited and Stotras Pty Ltd. The company has established
relationships with its customers many of whom have been associated with the company for
over 10 years.

Exhibit 12. Details of key Formulations and their applications

Used on paddy, pulses, Bengal gram, black gram, green gram, tea, sugarcane and cotton for killing of pests such as brow n plant hoppers,
Crotax – 36 green leaf hopper, leaf roller/folder, yellow stemborer shoot fly, pod borer, leaf minor, early shoot borer mealy bug, pyrilla, scale insect stalk
bore, American boll w arm, aphid leaf hopper, grey w eevil, spotted bollw orm, pink bollw orm, thrips and w hite fly.
Used on paddy, cotton, brinjal, cabbage, onion, apple and citrus for killing of pests such as hispa, leaf roller, gall midge, stem borer, w horl
Chlorax – 20
maggot, aphid, bol w orm, w hite fly, shoot and fruit borer, diamond blackmoth, root grub, aphid, laf hopper, black citrus and aphid.
Tridev Used on cotton for killing of pests including bollw orm complex.
Used on cotton, paddy, chilies, sugarcane, mango, sunflow er and okra for killing pests such as aphid, w hitefly, jassids, thrips, brow n plant
IPL 505
hopper, w hite-backed plant hopper, green leaf hopper, jassid, aphid, thrip, termite and hopper.
Used on grapes, redgram, cotton, cabbage, chikpea, brinjal, okra, chilies for killing pests such as thrips, pod borer, bollw orms, diamond black
IPL Soldier
moth, pod borer, fruit and shoot borer and mites.
Used on mango, potato, cotton, w heat, tea, cumin, tomato, rice, citrus brinjal, okra, mustard for killing pests such as hopper, aphid, jassid,
IPL Tara
w hitefly, mosquito bug, stem borer, gall midge, leaf folder, brow n plant hopper, w hite-backed plant hopper, greenleaf hopper, thrips and psylla.
Used on cotton, paddy, chilies, sugarcane, mango, sunflow er, okra for killing pests such as aphid, w hitefly, jassid, thrip, brow n plant hopper,
Immidiator
w hite-backed plant hopper, greenleaf hopper, termite and hopper.
Used on transplanted rice for killing of w eeds such as Echinochloa Crusgalli, Echinochloa Colonum, Cyperus Difformis, Cyperus Isra,
Agni
Fimbirstylis Miliacea, Eclipta Alba, Ludw igia Pulviflora, Leptochloa Chinensis, Monochorea Vaginalis and Panicum Repens.
Takatvar Used on chilies and potato for killing pests such as fruit rot (anthracnose), early blight and late blight.
#
Ziram – 27 Used on grape, apple, bean, potato, tomato for killing pets such as dow ny mildew anthracnose, scab, anthracnose, early blight.
Used on grapes, apples, beans, potatoes and tomato for killing of pests such as dow ny mildew , anthracnose, scab, anthracnose and early
Ziram – 80#
blight.
Used on apples, cherries, grapes, potatoes, tomatoes, chilies, tobacco and coffee for killing of pests such as scab, brow n rot, dow ny mildew ,
Captax – 50#
early blight, late blight, damping off and leaf spot.
Source: IPL DRHP # Ziram – 27, Ziram – 80 and Captax – 50 are manufactured using Ziram and Captan that are part of a list of 27 products that are proposed to be banned for sale in India by the Department of
Agriculture, Government of India
Exhibit 13. Business mix over the years Exhibit 14. Geographical revenue break-up
100% 100%
25% 20% 21% 21% 21% 21%

30% 30% 30%
38% 43%
75% 75% 50%
50% 50%
75% 80% 79% 79% 79% 79%

70% 70% 70%
62% 57%
25% 25% 50%
0% 0%
Technicals Formulations Export Sales Domestic Sales


Industry overview
Global agrochemicals market likely to register 7% CAGR over CY19-24E: The global
agrochem market was valued at USD 62.5bn in CY19 and is forecasted to reach USD 86bn
by CY24E, at a 6.6% CAGR. The primary demand drivers for the crop protection chemicals
market are a) increasing demand for food security in order to meet the needs of a growing
population and b) growing instances across the world of pest attacks, increasing the need for
crop protection chemicals.
India’s agrochemicals market likely to deliver 4% CAGR over CY19-24E: India has been
ranked fourth globally in the production of agrochemicals (crop protection chemicals/
pesticides) after the United States, Japan and China and the Indian crop protection chemicals
market is valued at USD 2.1bn, which is expected to deliver 4% CAGR in the next 5 years,
reaching USD 2.6bn by 2024. Insecticides contribute the highest market share in the Indian
crop protection chemicals market accounting approximately more than half of the total
market. India has almost 10,000 types plant-eating insects. In the agriculture value chain,
agrochemicals are the final external stimulus provided to plants.
Demand drivers of the crop protection chemicals market:
a) Increase in horticulture and floriculture production: Fruits and vegetables contribute ~90%
to the total horticulture produce in India. The Government of India has been promoting
export of horticulture products, which is expected to increase farmers’ income. In order to
avoid horticulture crop losses, the crop protection chemicals market is expected to increase
over the next half-decade. Horticulture is a higher-margin business and is therefore expected
to contribute more to the growth of crop protection chemicals. Floriculture is another
segment which is similar to horticulture in terms of providing growth avenues resulting in
increased demand of crop protection chemicals in India.
b) Increasing shortage of labour: The urban population in India is expected to exceed 40% by
2030, according to a survey conducted by United Nation Dept. of Population. It is further
expected to reach 50% in India by 2050. Increasing urbanisation has led to shortage of
labour in the rural agriculture sector. This has further led to increase in wages for the labour.
Due to this change, herbicidal usage will be boosted in order to improve the soil fertility, as
against the traditional usage of labour for herb removal from farms.
Demand drivers for Technicals market:
a) Increase in export led demand: Increase in custom synthesis manufacturing/contract

research and manufacturing service activities in India has helped the increase in domestic
manufacturing of pesticide technical materials. Players from developed countries are looking
to collaborate with active ingredient manufacturers in India, leveraging cost effective
manufacturing supported by cheaper labour force and stronger research and development
capabilities.
b) Supply chain interruptions with China on account of the COVID-19 crisis: In order to
reduce import dependence on China, several initiatives such as Aatma-Nirbhar Bharat have
been adopted by the Government of India. This is expected to increase the domestic
manufacturing over the next half decade.
c) Need for increase in crop yield and crop mix: India is the largest producer of generic
pesticides and is utilising its position as a low-cost producer to increase exports. In India, only
approximately 20% to 25% of the cultivated area is treated with pesticides, also the per
capita consumption is approximately 300 to 400 grams per hectare as against that of 3,000
grams per hectare in developed countries. As a result, there exists significant scope to
increase consumption. Indian agriculture has the task of feeding and clothing 16% of the
world’s population on less than 2% of the total landmass. With maximum gross cultivated
area already reached, the scope for bringing new areas under cultivation is severely limited.
Thus, the growth will have to come from increased productivity. There is a shift in cropping
pattern from food grains to fruits and vegetables as farmers are seeing more value gain
under this segment, hence, the pesticide consumption has increased and is expected to
further increase with the growth in horticulture.

Exhibit 15. Global Agrochemicals market likely to reach USD 86bn by Exhibit 16. Indian crop protection market likely to reach USD 5.7bn by
CY24E CY24E
100.0 6.0 5.7
86.0 5.7
4.2
75.0 4.5
3.1
62.5 3.2
48.6 2.1
3.0
50.0
1.5
1.5
25.0 2.6
2.1
1.7
0.0
0.0 CY14 CY19 CY24E
CY14 CY19 CY24E Domestic Export
Exhibit 17. Global Agrochemicals market by region, 2019 Exhibit 18. India crop protection market by product type (domestic),
2019
100% 3% 4% 4%
18% 19% 19%

ROW
(LatAm,M 75%
EA), APAC, 23%
24% 28%
21.0% 41.8%
50%
North
America,
15.1% 25%
56% 53% 49%
0%
Europe, CY14 CY19 CY24E
22.1%
Insecticides Herbicides Fungicides Others
Exhibit 19. List of competitors in crop protection chemical market in India (2019)
MNCs Indian com panies (listed)
China National Coporation Ltd UPL Limited
Sumitomo Chemicals Co. Ltd PI Industries Ltd.
BASF SE Jubilant Life Sciences Ltd.
Yara Internation ASA Dhanuka Agritech Ltd.
AMVAC Chemical Coporation Bharat Rasayan Ltd.
FMC Corporation Meghmani Organics Ltd.
Bayer AG Rallis India Ltd.
Corteva INC. Indofil Chemicals Ltd.
Source: IPL DRHP

India is a net exporter of crop protection chemicals, with approximately 50% of all its
production being exported to other countries. The primary export markets are the United
States, Brazil, Netherland and France. India is currently the fourth largest producer of crop
protection chemicals internationally. Multinationals are taking advantage of cost-effective
manufacturing in India along with availability of skilled labour. India is expected to emerge as
an export hub for the manufacture of crop protection chemicals, which would be exported to
developed and developing economies internationally.
India’s crop protection chemical exports registered ~9% CAGR over 2015-19. The actual
export contribution of crop protection chemicals was 50% of total domestic production (by
value) in 2019. Exports are projected to grow to almost 55% in 2024 (by value). In 2024,
exports are expected to grow to USD 3.1bn, contributing 55% of total domestic production
which is expected to be valued at USD 5.7bn. India was world’s third largest pesticide
exporter by volume in 2018. China leads the exports of pesticides with 27% of market share
in the world exports, followed by Germany (8.3%), India (8%), United States, Belgium and
France.
The manufacture of agrochemical technicals in India is strongly driven by export-led demand

and contract manufacturing in India. India is recognised for its sizeable skilled labour force,
strong R&D capabilities and rapidly changing infrastructure developments.
Exhibit 20. Indian crop protection chemicals market by exports and domestic use (USD bn)
6.0 5.7
4.5 4.2
3.1
3.2
3.0 2.1
1.5
1.5
2.6
2.1
1.7
0.0
CY14 CY19 CY24F
Domestic Export
Source: IPL DRHP
Exhibit 21. India crop protection chemicals import by product type Exhibit 22. India crop protection chemicals export by product type
160 800
46
111
120 600
241
80 400
97 77
20 70
58
18 17 97
40 48 78 100
20
200 68
16 60 326
38
27 30 39
18 17 174 166 186
106 134
7 7 8 8 9 12
0 0
CY15 CY16 CY17 CY18 CY19 CY24F CY15 CY16 CY17 CY18 CY19 CY24F
Fungicides (in KT) Herbicides (in KT) Insecticides (in KT) Fungicides (in KT) Herbicides (in KT) Insecticides (in KT)
Source: IPL DRHP, Ministry of Commerce, Government of India Source: IPL DRHP, Ministry of Commerce, Government of India

Capacity expansion and launch of new products to pave the way

for future growth
IPL currently has two manufacturing facilities located at UPSIDC Industrial Area at Dewa
Road, Lucknow and Sandila, Hardoi in Uttar Pradesh, India that are spread across over 25
acres. As of end-FY21, IPL’s facilities had a combined installed capacity of 26,000 MTPA for
the manufacture of Technicals and Formulations.
Each of its facilities has the ability to manufacture a wide range of products, which provides it
with the flexibility to cater to changing demands in the market, thereby reducing dependence
on any one major product category. The company also has pilot facilities to test
commercialisation of its products. IPL has also commenced construction of two
manufacturing units at its Sandila facility, which are proposed to be used for herbicide
Technicals. The company has obtained permission from the MoEF to expand its
manufacturing capacity at Sandila to up to 30,000 MT.
Moreover, during the 1QFY22 post-earnings conference call, management highlighted that it
has been allotted 25 acres land for its 3rd facility at a cost of INR 250mn-300mn. The
company is soon slated to apply for environment clearances for this facility. The envisaged
capex for this facility is INR 3bn-3.5bn over FY23-25.
Exhibit 23. Products manufactured at IPL’s manufacturing facilities

Technicals Formulations
Manufacturing Facility
Herbicides Fungicides APIs
Dew a Road - √ √ √
Sandila √ √ - √
Source: Company, √ denotes that the product is manufactured at the relevant facility.
Exhibit 24. Installed capacity and utilisation of IPL's facilities

Facility FY18 FY19 FY20 FY21 FY22E FY23E FY24E
Dew a Road - Technicals
Installed capacity (MT)* 2,100 2,100 2,100 2,100 2,100 2,100 2,100
Actual production (MT)** 1,995 1,910 1,806 2,000 1,995 1,995 1,995
Capacity utilisation (%)*** 95% 91% 86% 95% 95% 95% 95%
Dew a Road - Form ulations
Sandila - Technicals
Sandila - Form ulations
Total - Technicals
Total - Form ulations
Source: Company, JM Financial

Raw materials
IPL’s cost of materials consumed constitutes the largest component of its cost structure. For
FY18, FY19 and FY20 and FY21, its cost of materials consumed (excl. changes in inventories)
was INR 1,198mn, INR 1,945mn, INR 2,566mn, and INR 3,300mn, or 47.3%, 57.1%, 53.5%,
and 50.9% of its revenue from operations, respectively. Major raw materials used as part of
its manufacturing operations include chlorine, tetrahydro phthalic anhydride, carbon di
sulphide, technical grade urea, di-n-propylamine, benzyl chloride and other speciality
chemicals based on their application. Imports of raw materials accounted for 26.3%, 35.0%,
34.6% and 38.0%, respectively of its total raw materials during the above mentioned period.
The company sources its primary raw materials from within India and has developed
relationships with multiple vendors for major raw materials to ensure timely delivery and
adequate supply. The company has had long-standing business relations with its vendors.
This reduces its dependence on a single or limited number of suppliers. Raw materials
imported from China as a % of total raw material purchases was 30.3% in FY21. In FY18,
FY19, FY20, and FY21, 73.7%, 65.0%, 65.4% and 62.0% of its raw materials were sourced
locally. The company believes that its ability to procure raw material domestically enables it to
withstand volatility in raw material prices and ensures continuous supply for its operations.
Exhibit 25. IPL’s raw material cost as % of sales is likely to remain at ~50% over FY22-24E
60%
45%
30%
57%
54% 51% 50% 50% 50%
15%
0%
Raw material cost (excl. chng in inventories) as % of sales
Source: IPL DRHP

Financials
 Expect Revenue/PAT CAGR of 16%/18% over FY21-24E with industry best EBITDA
margins: IPL’s FY20 revenue/EBITDA/PAT stood at INR 4.8bn/0.9bn/0.7bn. The company is
likely to post revenue/PAT CAGR of 16%/18% over FY21-24E on the back of capacity
expansion of existing Technicals and launch of new high value Technicals. IPL currently
has an industry best EBITDA margin which is likely to sustain at 28-29% in FY22-24 aided
by a) positive operating leverage; b) raw material synergy; and c) launch of new high
value products. Moreover, management highlighted that ~28-30% EBITDA margin is
sustainable in the long run.
Exhibit 26. IPL likely to register 16% revenue CAGR over FY21-24E Exhibit 27. Exports are likely to remain at 70% of overall revenue
12,000 60% 100%
38% 43% 43% 43% 43%

9,000 45% 75% 50%
6,000 30% 50%
62% 57% 70% 70% 70%

3,000 15% 25% 50%
0 0% 0%
Revenue from operations (INR mn) YoY growth (RHS) (%) Export Sales Domestic Sales
Source: Company, JM Financial Source: Company , JM Financial
Exhibit 28. EBITDA margins are likely to inch up to 29% by FY24E Exhibit 29. PAT is likely to reach ~INR 2.2bn by FY24E
3,200 32% 2,400 200%
2,400 24% 1,800 150%
1,600 16%
1,200 100%
800 8%
600 50%
0 0%
FY19 FY20 FY21 FY22E FY23E FY24E 0 0%
EBITDA (INR mn) EBITDA margins (RHS) (%)
PAT (INR mn) YoY growth (RHS) (%)
Source: JM Financial, Company
Source: JM Financial, Company

Valuations
We believe IPL is an affordable play on India’s rising agrochemical exports due to: a) its focus
on R&D to develop generic agrochemical technicals; b) high asset turns due to raw material
synergies and its relatively lower capex (partly on lower lands cost in UP compared with other
parts of India). We initiate with a BUY and Sep’22 TP of INR 395/share (based on 22X
Sep’23E EPS).
Exhibit 30. IPL’s peer comparison

Company M.Cap EV/EBITDA P/E (x) P/B (x) ROE (%)
(USD Bn) FY21 FY22E FY23E FY21 FY22E FY23E FY21 FY22E FY23E FY21 FY22E FY23E
India Pesticide* 0.5 18.5 16.4 13.7 26.0 22.4 19.1 9.0 5.5 4.3 41.6 30.5 25.3
UPL 7.5 8.5 8.3 7.4 17.1 13.9 11.8 2.3 2.4 2.0 15.9 18.6 18.8
Rallis India 0.7 14.6 13.5 11.2 21.5 20.3 17.0 3.1 3.0 2.7 15.0 15.2 16.3
PI Industries 6.3 31.9 35.5 27.5 45.2 52.3 41.4 6.4 7.7 6.6 18.0 15.7 17.3
Dhanuka Agritech 0.5 11.4 13.2 11.7 NM 17.6 15.8 4.0 4.1 3.4 26.7 25.3 23.3
Insecticides India 0.2 6.2 7.8 6.9 10.0 12.4 10.7 1.1 1.6 1.4 10.5 12.7 13.1
Bayer Crop Science India 3.3 28.0 25.6 22.1 48.6 34.6 29.6 9.4 8.1 6.9 21.1 25.3 25.1
Godrej Agrovet 1.6 20.2 19.0 16.3 32.1 29.6 24.7 4.9 5.2 4.6 16.2 18.4 19.5
Sharda Chemicals 0.4 5.6 4.7 4.1 11.3 10.7 9.6 1.6 1.4 1.3 14.3 14.8 14.5
Astec Lifesciences 0.3 19.3 20.3 15.2 30.2 33.4 25.4 6.4 6.6 5.2 22.9 22.3 22.5
Source: Bloomberg, JM Financial, Note: *JMFe
Key risks
 Seasonal variations and unfavourable local and global weather patterns: IPL is engaged in
the manufacture of agro-chemical Technicals and Formulations, and as a result, its
business is sensitive to weather conditions such as drought, floods, cyclones and natural
disasters, as well as events such as pest infestations. The most important determinant of
its sales is the volume of crops planted. Adverse conditions early in the season, especially
drought conditions, can result in significantly lower-than-normal plantings of crops and
therefore lower demand for crop protection products. This can result in its sales in a
particular region varying substantially from year to year. Weather conditions can also
result in earlier or later plantings and affect the levels of pest infestations, which may
affect both the timing and volume of its sales or the product mix. Adverse weather
conditions may also cause volatility in the prices of commodities, which may affect
farmers’ decisions about the types and quantum of crops to plant and may consequently
affect the sales of its agro-chemical Technicals and Formulations.
 An inability to procure the desired quality, quantity of its raw materials in a timely manner
and at reasonable costs, or at all, may have a material adverse effect on its business,
results of operations and financial condition. Any delay in supplying finished products to
customers, dealers and/ or distributors in accordance with the terms and conditions
agreed with them, such as delivery within a specified time, as a result of delayed raw
material supply, could result in the customer, dealer and/ or distributor refusing to accept
its products, which could have an adverse effect on its business and reputation. In the
event of fluctuations in the cost of raw materials, it may not be able to effectively pass on
all increases in the cost of raw materials to its customers, which may affect its margins,
sales, results of operations and cash flows.
 Foreign exchange fluctuation risk: In FY18, FY19, FY20 and FY21, revenue generated
from exports accounted for 34.6%, 50.1%, 62.1% and 56.7%, respectively, of its total
revenue from operations in such periods. Similarly, a significant portion of its expenses,
including cost of any imported raw material and other operating expenses as well as
certain of its capital expenditure on equipment imported are denominated in currencies
other than Indian Rupees. In FY18, FY19, FY20 and FY21, expenses in foreign currency
accounted for 14.5%, 23.5%, 20.8% and 26.2%, respectively, of its total expenses in
such periods. The exchange rate between the Indian Rupee and foreign currencies,
primarily the USD, has fluctuated in the past and the company’s results of operations
have been impacted by such fluctuations in the past and may be impacted by such
fluctuations in the future.

 Concentration risk: The company depends on a limited number of customers for a

significant portion of its revenues. In FY18, FY19, FY20 and FY21, its top 10 customers
represented 43.8%, 54.4%, 58.6% and 56.8%, respectively, of its total revenues from
operations in such periods. Its largest customer represented 29.6%, 16.8% and 19.2% of
its total revenues from operations in FY18, FY19, FY20 and FY21, respectively. There can
be no assurance that its significant customers in the past will continue to place similar
orders with the company in the future.
 High dependency on R&D and introduction of innovative products: R&D is integral to the
company’s business and it is continuously engaged in trying to develop new processes for
manufacturing agro-chemical products or improve or further optimize and streamline the
process of the production of various agro-chemical products. Its R&D efforts may not
result in new technologies or products being developed on a timely basis or meet the
needs of its customers as effectively as competitive offerings. The company has invested
substantial effort, funds and other resources towards its R&D activities and has set-up two
dedicated R&D centre. In FY18, FY19, FY20 and FY21, its expenditure towards R&D was
INR 14.8mn, INR 14.6mn, INR 16.3mn, and INR 20.2mn, respectively.

Board of Directors and Key Managerial Personnel

Board of Directors
 Anand Swarup Agarwal is the Chairman and non-executive Director of the Company. He
holds a bachelor’s degree in law from the University of Lucknow. He has over 35 years of
experience in agrochemical manufacturing. He is one of the Promoters and one of the
founders of the Company. In the year 2003, the Government of India, Ministry of Finance
(Department of Economic Affairs – Banking Division) nominated him as a part time non-
official director on the board of directors of Punjab National Bank for a period of three
th
years from 25 Nov’03. He has also been a director on the board of directors of PNB Gilts
Limited. He has been awarded with the UP Ratan award in the year 2013 by the All India
Conference of Intellectuals.
 Rajendra Singh Sharma is the whole-time Director of the Company. He holds a bachelor’s
degree of science in agriculture from the University of Meerut. He has been associated
with the Company since last 22 years and was initially appointed as a director of the
th
Company on 10 Jun’98. He has experience in agro-chemical manufacturing.
 Rahul Arun Bagaria is the Non-Executive Director of the Company. He holds a bachelor’s
degree in commerce from University of Mumbai and is a Qualified Chartered Accountant.
He has more than five years of professional experience and expertise in corporate law and
taxation.
 Adesh Kumar Gupta is an Independent Director of the Company. He holds a bachelor’s

degree in commerce from the University of Jodhpur and is a qualified chartered
accountant. He is a registered insolvency professional with the Insolvency and Bankruptcy
Board of India. He previously held the position of whole time director and chief financial
officer at Grasim Industries Limited and has also been a director at Ultra Tech Cement
Limited.
 Mohan Vasant Tanksale is an Independent Director of the Company. He is a member of

the Institute of Cost and Works Accountants of India. He was previously the chairman
and managing director of Central Bank of India and was an executive director on the
board of Punjab National Bank till Jun’11.
 Madhu Dikshit is an Independent Director of the Company. She holds a master’s degree
in science (bio chemistry) from the University of Allahabad and a PhD in chemistry from
the Chhatrapati Shahuji Maharaj University, Kanpur. In the past, she has been associated
with the CSIR – Central Drug Research Institute, Lucknow as a director and has been a
visiting professor of Indian Institute of Technology, Jodhpur. She has also been appointed
as the national chair of the Transitional Health Science and Technological Institute,
Faridabad.
Key Management Personnel
 Dheeraj Kumar Jain is the Chief Executive Officer of the Company for a period of five
rd
years from 23 Jan’21. He holds a bachelor’s degree and a master’s degree in chemical
engineering from Osmania University, Hyderabad India. He joined the company on
December 1, 1995. He has more than 25 years of experience with the Company and has
been responsible for product development, international business development and
project engineering. Prior to joining the Company he has worked with Indian Institute of
Chemical Technology, Hyderabad.
 Satya Prakash Gupta is the Chief Financial Officer of the Company. He holds a bachelor’s
degree in commerce from the University of Allahabad. He is an associate member of the
Institute of Cost Accountants of India and an associate member of the Institute of
Chartered Accountants of India. He has over 27 years of experience in the field of
finance. Prior to joining the Company, he has worked at Delite Commercial Limited and
st
Trimurtee Fertilisers Limited. He joined the Company on 1 Jan’94 as a finance advisor
th
and was subsequently appointed as the Chief Financial Officer of the Company on 25
st
Sep’20, with effect from 1 Nov’20.

 Ajeet Pandey is the Company Secretary and Compliance Officer of the Company. He
holds bachelor’s in commerce from Dr. Ram Manohar Lohia Awadh University, Faizabad
and a bachelor’s degree in law from the Chhatrapati Shahu Ji Maharaj University, Kanpur.
He is an associate member of the Institute of Company Secretaries of India and has prior
experience in secretarial services. Prior to joining the Company, he has worked with
Jagran Prakashan Limited as a secretarial officer. He joined the Company as the company
st
secretary on 1 Oct’20.
 Ajai Kumar Sinha is the general manager - formulation marketing of the Company. He
holds a master’s of technology degree (chemical technology) from Kanpur University and
a master’s degree in business administration from Punjab Technical University, Jalandhar.
st
He joined the Company on 1 Apr’91 and has experience in the filed of marketing.
 B.T Hanumantha Reddy is the general manager of the Company. He holds a bachelor’s
degree in engineering from Bangalore University. Prior to joining the Company he has
previously worked with Balaji Amines Limited, Insecticides (India) Limited, Kanoria
Chemicals & Industries Limited, Nagarjuna Agrichem Limited, Rallis India Limited, Watsol
Organics Limited, Vantech Pesticides Limited, NetMatrix Crop Care Limited and Chemagro
International Limited and has experience in the field of operations and project
management.

Financial Tables (Consolidated)

Income Statement (INR mn) Balance Sheet (INR mn)
Y/E March FY20A FY21A FY22E FY23E FY24E Y/E March FY20A FY21A FY22E FY23E FY24E
Net Sales 4,796 6,490 7,393 8,532 10,069 Shareholders’ Fund 2,568 3,895 6,384 8,130 10,212
Sales Growth 40.8% 35.3% 13.9% 15.4% 18.0% Share Capital 32 112 115 115 115
Other Operating Income 0 0 0 0 0 Reserves & Surplus 2,537 3,783 6,269 8,015 10,096
Total Revenue 4,796 6,490 7,393 8,532 10,069 Preference Share Capital 0 0 0 0 0
Cost of Goods Sold/Op. Exp 2,531 3,104 3,697 4,266 5,035 Minority Interest 0 0 0 0 0
Personnel Cost 164 227 243 260 279 Total Loans 240 300 125 125 125
Other Expenses 1,166 1,327 1,398 1,558 1,801 Def. Tax Liab. / Assets (-) 73 81 81 81 81
EBITDA 1,037 1,895 2,055 2,448 2,955 Total - Equity & Liab. 2,881 4,276 6,590 8,336 10,418
EBITDA Margin 21.6% 29.2% 27.8% 28.7% 29.3% Net Fixed Assets 1,006 1,364 2,331 3,607 4,295
EBITDA Growth 46.8% 82.8% 8.4% 19.1% 20.7% Gross Fixed Assets 1,038 1,349 2,449 3,949 4,949
Depn. & Amort. 51 61 133 224 311 Intangible Assets 3 3 3 3 3
EBIT 986 1,834 1,922 2,224 2,643 Less: Depn. & Amort. 89 150 283 507 819
Other Income 101 64 202 252 306 Capital WIP 54 162 162 162 162
Finance Cost 52 34 27 18 18 Investments 43 510 510 510 510
PBT before Excep. & Forex 934 1,799 2,097 2,458 2,931 Current Assets 2,608 3,298 4,748 5,348 6,917
Excep. & Forex Inc./Loss(-) 0 0 0 0 0 Inventories 386 701 798 921 1,087
PBT 934 1,799 2,097 2,458 2,931 Sundry Debtors 1,832 2,142 2,440 2,817 3,324
Taxes 226 454 529 620 740 Cash & Bank Balances 67 19 1,074 1,174 2,070
Extraordinary Inc./Loss(-) 0 0 0 0 0 Loans & Advances 0 0 0 0 0
Assoc. Profit/Min. Int.(-) 0 0 0 0 0 Other Current Assets 323 436 436 436 436
Reported Net Profit 708 1,345 1,568 1,838 2,191 Current Liab. & Prov. 776 895 998 1,128 1,304
Adjusted Net Profit 708 1,345 1,568 1,838 2,191 Current Liabilities 617 742 845 975 1,150
Net Margin 14.8% 20.7% 21.2% 21.5% 21.8% Provisions & Others 159 154 154 154 154
Diluted Share Cap. (mn) 111.5 111.5 111.8 111.8 111.8 Net Current Assets 1,832 2,402 3,750 4,220 5,613
Diluted EPS (INR) 6.4 12.1 14.0 16.4 19.6 Total – Assets 2,881 4,276 6,590 8,336 10,418
Diluted EPS Growth 61.2% 90.0% 16.2% 17.2% 19.3% Source: Company, JM Financial
Total Dividend + Tax 8 35 78 92 110
Dividend Per Share (INR) 0.1 0.3 0.7 0.8 1.0
Cash Flow Statement (INR mn)

Dupont Analysis
Y/E March FY20A FY21A FY22E FY23E FY24E
Y/E March FY20A FY21A FY22E FY23E FY24E
Profit before Tax 934 1,799 2,097 2,458 2,931
Net Margin 14.8% 20.7% 21.2% 21.5% 21.8%
Depn. & Amort. 51 61 133 224 311
Asset Turnover (x) 1.8 1.8 1.4 1.1 1.1
Net Interest Exp. / Inc. (-) 48 6 27 18 18
Leverage Factor (x) 1.2 1.1 1.1 1.0 1.0
Inc (-) / Dec in WCap. -34 -616 -293 -369 -498
Others -24 31 0 0 0 RoE 31.9% 41.6% 30.5% 25.3% 23.9%
Taxes Paid -223 -449 -529 -620 -740

Operating Cash Flow 752 833 1,435 1,711 2,023 Key Ratios
Capex -308 -419 -1,100 -1,500 -1,000 Y/E March FY20A FY21A FY22E FY23E FY24E
Free Cash Flow 443 414 335 211 1,023 BV/Share (INR) 23.0 34.9 57.1 72.7 91.4
Inc (-) / Dec in Investments -5 -46 0 0 0 ROIC 29.6% 43.1% 33.5% 28.9% 27.6%
Others 3 -375 0 0 0 ROE 31.9% 41.6% 30.5% 25.3% 23.9%
Investing Cash Flow -311 -840 -1,100 -1,500 -1,000 Net Debt/Equity (x) 0.1 0.0 -0.2 -0.2 -0.2
Inc / Dec (-) in Capital 0 80 1,000 0 0 P/E (x) 49.4 26.0 22.4 19.1 16.0
Dividend + Tax thereon 0 0 0 0 0 P/B (x) 13.6 9.0 5.5 4.3 3.4
Inc / Dec (-) in Loans -330 28 -174 0 0 EV/EBITDA (x) 34.0 18.5 16.4 13.7 11.1
Others -60 -149 -106 -110 -128 EV/Sales (x) 7.4 5.4 4.6 3.9 3.3
Financing Cash Flow -390 -41 720 -110 -128 Debtor days 139 120 120 120 120
Inc / Dec (-) in Cash 51 -48 1,055 100 895 Inventory days 29 39 39 39 39
Opening Cash Balance 16 67 19 1,074 1,174 Creditor days 58 58 58 58 59
Closing Cash Balance 67 19 1,074 1,174 2,070 Source: Company, JM Financial

APPENDIX I
JM Financial Inst itut ional Secur ities Lim ited

Corporate Identity Number: U67100MH2017PLC296081
Member of BSE Ltd., National Stock Exchange of India Ltd. and Metropolitan Stock Exchange of India Ltd.
SEBI Registration Nos.: Stock Broker - INZ000163434, Research Analyst – INH000000610
Registered Office: 7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025, India.
Board: +9122 6630 3030 | Fax: +91 22 6630 3488 | Email: jmfinancial.research@jmfl.com | www.jmfl.com
Compliance Officer: Mr. Sunny Shah | Tel: +91 22 6630 3383 | Email: sunny.shah@jmfl.com
Definition of ratings
Rating Meaning
Buy Total expected returns of more than 10% for large-cap stocks* and REITs and more than 15% for all other stocks, over the next twelve
months. Total expected return includes dividend yields.
Hold Price expected to move in the range of 10% downside to 10% upside from the current market price for large-cap* stocks and REITs and
in the range of 10% downside to 15% upside from the current market price for all other stocks, over the next twelve months.
Sell Price expected to move downwards by more than 10% from the current market price over the next twelve months.
* Large-cap stocks refer to securities with market capitalisation in excess of INR200bn. REIT refers to Real Estate Investment Trusts.
Research Analyst(s) Certification
The Research Analyst(s), with respect to each issuer and its securities covered by them in this research report, certify that:
All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their securities; and
No part of his or her or their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this research
report.
Important Disclosures
This research report has been prepared by JM Financial Institutional Securities Limited (JM Financial Institutional Securities) to provide information about the
company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its associates solely for the purpose of information of the select
recipient of this report. This report and/or any part thereof, may not be duplicated in any form and/or reproduced or redistributed without the prior written
consent of JM Financial Institutional Securities. This report has been prepared independent of the companies covered herein.
JM Financial Institutional Securities is registered with the Securities and Exchange Board of India (SEBI) as a Research Analyst and a Stock Broker having trading
memberships of the BSE Ltd. (BSE), National Stock Exchange of India Ltd. (NSE) and Metropolitan Stock Exchange of India Ltd. (MSEI). No material disciplinary
action has been taken by SEBI against JM Financial Institutional Securities in the past two financial years which may impact the investment decision making of the
investor.
JM Financial Institutional Securities renders stock broking services primarily to institutional investors and provides the research services to its institutional
clients/investors. JM Financial Institutional Securities and its associates are part of a multi-service, integrated investment banking, investment management,
brokerage and financing group. JM Financial Institutional Securities and/or its associates might have provided or may provide services in respect of managing
offerings of securities, corporate finance, investment banking, mergers & acquisitions, broking, financing or any other advisory services to the company(ies)
covered herein. JM Financial Institutional Securities and/or its associates might have received during the past twelve months or may receive compensation from
the company(ies) mentioned in this report for rendering any of the above services.
JM Financial Institutional Securities and/or its associates, their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell
the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) covered under this report or (c) act as an advisor or lender/borrower to,
or may have any financial interest in, such company(ies) or (d) considering the nature of business/activities that JM Financial Institutional Securities is engaged in,
it may have potential conflict of interest at the time of publication of this report on the subject company(ies).
Neither JM Financial Institutional Securities nor its associates or the Research Analyst(s) named in this report or his/her relatives individually own one per cent or
more securities of the company(ies) covered under this report, at the relevant date as specified in the SEBI (Research Analysts) Regulations, 2014.
The Research Analyst(s) principally responsible for the preparation of this research report and members of their household are prohibited from buying or selling
debt or equity securities, including but not limited to any option, right, warrant, future, long or short position issued by company(ies) covered under this report.
The Research Analyst(s) principally responsible for the preparation of this research report or their relatives (as defined under SEBI (Research Analysts) Regulations,
2014); (a) do not have any financial interest in the company(ies) covered under this report or (b) did not receive any compensation from the company(ies) covered
under this report, or from any third party, in connection with this report or (c) do not have any other material conflict of interest at the time of publication of this
report. Research Analyst(s) are not serving as an officer, director or employee of the company(ies) covered under this report.
While reasonable care has been taken in the preparation of this report, it does not purport to be a complete description of the securities, markets or
developments referred to herein, and JM Financial Institutional Securities does not warrant its accuracy or completeness. JM Financial Institutional Securities may
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This
report is provided for information only and is not an investment advice and must not alone be taken as the basis for an investment decision.

The investment discussed or views expressed or recommendations/opinions given herein may not be suitable for all investors. The user assumes the entire risk of
any use made of this information. The information contained herein may be changed without notice and JM Financial Institutional Securities reserves the right to
make modifications and alterations to this statement as they may deem fit from time to time.
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23 August 2021

INDIA | CHEMICALS | COVERAGE INITIATION

We believe IPL is an affordable play on India’s rising agrochemical

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India Pesticides Limited

Recommendation and Price Target Financial Summary (INR mn)

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30% 30% 30%

6,000 30% 50%

70% 70% 70%

25% 20% 21% 21% 21% 21%

75% 80% 79% 79% 79% 79%

RoE Technicals Formulations

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Capacity Utilisation (RHS) (%) Average Realisation on Prodution (INR/Kg)

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Exhibit 11. Technicals (Fungicides & Herbicides) and APIs

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Exhibit 12. Details of key Formulations and their applications

25% 20% 21% 21% 21% 21%

75% 80% 79% 79% 79% 79%

Technicals Formulations Export Sales Domestic Sales

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Demand drivers of the crop protection chemicals market:

Demand drivers for Technicals market:

a) Increase in export led demand: Increase in custom synthesis manufacturing/contract

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18% 19% 19%

Source: IPL DRHP Source: IPL DRHP

Source: IPL DRHP

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The manufacture of agrochemical technicals in India is strongly driven by export-led demand

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Capacity expansion and launch of new products to pave the way

Exhibit 23. Products manufactured at IPL’s manufacturing facilities

Exhibit 24. Installed capacity and utilisation of IPL's facilities

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12,000 60% 100%

38% 43% 43% 43% 43%

6,000 30% 50%

62% 57% 70% 70% 70%

2,400 24% 1,800 150%

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Exhibit 30. IPL’s peer comparison

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 Concentration risk: The company depends on a limited number of customers for a

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Board of Directors and Key Managerial Personnel

 Adesh Kumar Gupta is an Independent Director of the Company. He holds a bachelor’s

 Mohan Vasant Tanksale is an Independent Director of the Company. He is a member of

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Financial Tables (Consolidated)

Cash Flow Statement (INR mn)