Based on some requests:
… and my own curiosity, here is a side-by-side (SxS) comparison between Astec and Bharat Rasayan:
Objective Parameters
| Attribute | Type of Attribute | Bharat Rasayan | Astec Lifesciences |
|---|---|---|---|
| Type of Key product | Products | Insecticide, Herbicide | Fungiside, Herbicide |
| Key Products | Products | Metaphenoxy Benzaldehyde, Lambda Cyhalothrin, Metribuzin, Chloropyrophil, Para Chloro Benzene Cyanide | Tebuconazole, Propiconazole, Hexaconazole, Difenoconazole |
| Metalaxyl, Tricyclazole, Imazethapyr, Lambda cyhalothrin | |||
| Key Clientele | Clients | Bharat group unlisted companies | Exports, Godrej Agrovet |
| Export Clients | Clients | Bayer, Syngenta, Nissan, Adama | 8 of the top 20 global agrochemical players |
| Promoter Holding | Promoters | 75% | 72% |
| Promoter Group | Promoters | Bharat Group | Godrej Group |
| Pledged % | Promoters | 0% | 0% |
| Willingness to increase contribution from Exports | Revenue Mix | Yes | yes |
| % of revenue from Exports in 2016 | Revenue Mix | 28% | 38% |
| % of revenue from Exports in 2019 | Revenue Mix | 23% | 56% |
| Evidence on walking the talk for increasing exports contribution in Revenue | Revenue Mix | No | Yes |
| Focus on CRAMS/CMO | Revenue Mix | Yes | Yes |
| % Contribution to Revenue from CRAMS | Revenue Mix | 5-10% | 22% |
| Working Capital / Sales in 2016 | Working Capital | 19% | -5% |
| Working Capital / Sales in 2020 | Working Capital | 57% | 2% |
| Debtor Days in 2016 | Working Capital | 71 | 126 |
| Debtor Days in 2020 | Working Capital | 75 | 112 |
| Fixed Asset Turns in 2016 | Efficiency | 3.3 | 2.45 |
| TTM Fixed Asset Turns | Efficiency | 5.6 | 2.9 |
| OPM in 2016 | Profitability | 18% | 14% |
| TTM OPM | Profitability | 20% | 19% |
| ROCE in 2016 | Profitability | 25% | 12% |
| ROCE in 2020 | Profitability | 34% | 20% |
| PE Ratio | Valuation | 25 | 37 |
| Sales (TTM) | Revenue | 1124 | 554 |
| Operating Cash Flow / Operating profit (Average of last 5 years) | Earnings Quality | 46% | 82% |
| EPS CAGR (2016 to Q1-FY21) | Past Growth | 44% | 46% |
| Sales CAGR (2016 to Q1-FY21) | Past Growth | 24% | 23% |
| Debt to Equity Ratio | Debt | 0.17 | 0.4 |
| Interest Coverage Ratio | Debt | 17.3 | 8.97 |
Note that the companies are a very good comparison, but not exactly apples to apples comparison. This is because primary focus for Bharat Rasayan is Insecticide whereas that for Astec is Fungicide. This is still a good comparison since both companies definitely do manufacture pesticides and are bound to compete for end consumer (Farmer)'s money.
I have also added some subjective opinions below:
| Attribute | Bharat Rasayan | Astec Lifesciences |
|---|---|---|
| Promoter Group Quality | Medium | High |
| Valuation | Reasonable | Over-valued |
| Past Growth | Very High | Very High |
| Growth Prospects | High | High |
| Asset Turns | High | Medium |
| Margins | High | High |
| Business Return Ratios | Very High | High |
| Exports | Management has guided to increase % of revenue from Exports but hasn’t yet Walked the Talk | Management has increased % of revenue from Exports |
| Relationship with Top global Agro players | Excellent | Excellent |
| CRAMS contribution to Revenue | Low | Medium |
| Past Earnings Quality | Low | High |
| Indebtedness | Low | Medium |
Note that these are my personal opinions. I could very well be wrong about them. I would be very happy to incorporate learnings from other investors or potential investors into this comparison to make it stronger.
The next level of deep dive required (imo) is to understand the size of the opportunities present for Astec and Rasayan’s current business product mixes. This is more involved and I intend to pursue this in due course of time. Please do note that these are not static businesses; they keep adding and substituting products and ideally any “opportunity size” analysis has to be repeated every 6 months / 1 year for it to continue to remain fresh and useful.
Disc: Invested in Astec, thinking about investing in Bharat Rasayan.
Edit: Added columns for earnings quality.