Insecticides (India) Ltd. share price target

Maintain BUY with a TP of Rs 937/sh (17x Jun'20 EPS). Insecticides Indias (INST) 1QFY19 revenue was at Rs 3.1bn (up 2.3% YoY). Revenue growth was muted due to lower concentration of Generic products in the mix. Change in the product mix led to strong EBITDA margin of 17.4% (up 122 bps), and EBITDA coming in at Rs 556mn (up 10.0% YoY). PAT came in at Rs 340mn, with a higher tax rate of 29.3% (against 27.6% in 1QFY18).

INST's long-term story remains intact; however the rise in raw material costs may lead to pressure on margins, hence we have marginally reduced our earnings estimates for FY19E/20E by 3.3/1.4% respectively. Accordingly reduced the target price to Rs 914 (vs. Rs 927) (17x FY20E EPS). Insecticides Indias (INST) reported muted results for 4QFY18; revenues stood at Rs 1.68bn (+2.5% YoY), largely driven by volume growth. The introduction of few specialty products led to an improvement in gross margins by 394bps YoY to 31.0%. Consequently, EBITDA grew by 55.2% YoY to Rs 187mn, and EBITDAM improved by 375bps to 11.0% for the quarter.

We upgraded our earnings estimates for FY19/20 by 5.0/4.8% respectively. We recommend BUY with a TP of Rs 893/sh (17x Dec FY19E EPS). Insecticides Indias (INST) reported good results for 3QFY18; revenues stood at Rs 1.75bn (+24.0% YoY). The growth was largely on account of 20% volume growth and rest from the price hike. The introduction of certain specialty products led to an improvement in gross margins by 190bps YoY to 31.3%. Consequently, EBITDA grew by 35.5% YoY to Rs 230mn, and EBITDAM improved by 111bps to 13.1% for the quarter. Lower interest cost (-18.1% YoY) led APAT to grow by 67.4% YoY to Rs 96mn.

Insecticides India Limited (IIL) which commenced op erations in 2001, has eme rged as an integr ated play er in the Indian agrochemicals market by entering into global tie- ups. With state-of -the-art R&D; f acilities and manuf acturing units, and a strong portf olio (99 products), IIL enjoy s a 7% share in the domestic market. IIL has a product portf olio of ov er 120 f ormulations and enjoy s a Pan India presence of ov er 5000 distributors, 60000 dealers and ov er 30 depots. IIL is a generic play er in the A gri chemicals space with 348 r egistrations and a v aried portf olio of 99 f ormulations and 18 Technicals. It has ov er the y ears dev eloped generic pr oducts under the Tractor Br and n ame. 75% of its business comprises of branded sales while 25% is B2B/Institutional sales IIL has 7 f ormulation manuf acturing assets across India with one R&D; centre and technical plant in Rajasthan and...

We recommend NEUTRAL with a TP of Rs 815/sh (17x Sept FY19E EPS). Insecticides Indias (INST) 2QFY18 revenue came in at Rs 4.1bn (+0.7% YoY). The companys flat growth was on account of the withdrawal of certain generic products. The introduction of certain specialty products led to an improvement in gross margins by 296bps YoY to 25.5%. Consequently, EBITDA grew by 17.7% YoY to Rs 556mn, and EBITDAM improved by 193bps to 13.4% for the quarter. Lower interest cost and higher other income boosted PAT to Rs 361mn (+28.7% YoY).

Insecticides India reported a muted performance, with its revenue growing by just 1% yoy to Rs4.2bn, owing to weak demand and lower sales of certain generic products. Gross margin improved by 330bps to 25.5% led by a better product mix. EBITDA increased by 18% yoy to Rs556mn as EBITDA margin expanded by 200bps yoy to 13%. Higher other income (+112% yoy to Rs24mn) led to a 29% yoy increase in PAT...

Maintain BUY with a TP of Rs 800/sh (17x FY19E EPS). Insecticides Indias (INST) 1QFY18 revenue was at Rs 3.1bn (14% YoY), led by strong growth in new products launched in FY17. Change in the product mix led to strong EBITDA margin of 16.2% (+338 bps), and EBITDA coming in at Rs 505mn (+44% YoY). Lower interest cost and other income boosted PAT to Rs 305mn (+67% YoY).

Insecticides Indias (INST) 3QFY17 revenues were muted at Rs 1.6bn ( 3% YoY), with demonetisation impacting volumes. However, a better product mix and lower RM costs led to expansion of gross margins to 39.5% ( 521 bps). EBITDA was strong at Rs 161mn ( 23%). Lower interest costs (due to debt repayment, lower rates) and tax rates boosted APAT to Rs 54mn ( 428%).

IILs 2QFY17 revenues grew by 26% YoY to Rs 4.7bn led by both formulations ( 27%) and technical segments ( 16%). Better product mix and contribution from Green Label (newly launched herbicide) resulted in expansion of gross margins to 31% ( 226 bps). EBITDA was strong at Rs 478mn (37%). Lower interest cost (debt repayment, lower rate) further boosted APAT to Rs 287mn ( 59%).

IILs 1QFY17 revenues grew 7% YoY to Rs 3.1bn mainly led by formulation segment. Gross margins improved to 32.7% ( 300bps YoY) led by better product mix. However, higher gross profits were negated by higher other expenses (inventory hit and marketing expenses for newly launched rice herbicide Green Label). Subsequently, EBITDA was Rs 367mn ( 5%) and APAT was Rs 181mn (-8%).