BLOCKBUSTER: Insecticides India

Companies making agricultural inputs for the domestic market have been rather immune to recent market volatility. Maker of broad-spectrum agrochemical products, Insecticides India, is no exception. Despite being a small-cap player on the sector, the stock is up 84 per cent in the last one year, having risen tenfold in three years.

The stock's tenfold gain in three years has been driven as much by a re-rating of the stock's valuation as by actual growth in profits. The PE multiple has moved from three times in 2008 to 15 times now. The company's net sales have trebled from Rs.197 crore in FY-08 to Rs 450 crore in FY-11, while profits have doubled from Rs 14.3 crore to Rs 32.2 crore.

The company makes both technical grade pesticides and formulations, with generic insecticides such as Chlorpyriphos, Phorate, Cypermethrin, fungicides such as mancozeb, and herbicides such as Sulfosulfuron in its portfolio. The company recently acquired the Monocil brand of formulations from Nocil, bolstering its formulation revenues.

The recent rally in the stock has been driven by the Supreme Court's decision to allow exports of 1.09 million tonnes of endolsulfan. The company however appears to be a limited beneficiary from this as its export presence is currently not very large. The company has announced plans to raise QIP funds to fund a Rs 60-70 crore expansion. Revenues from two new units at Udhampur and Dahej are expected to lift revenues over the next fiscal.



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