What’s the reason for such bad numbers?
Concall of India Pesticides Q4 - Fy24
I sort of liked the June numbers.
Growth is still missing.
But numbers of this quarter suggest some sort of stabilisation and bottoming out.
Will know better post 1-2 more quarters.
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Brief Summary from IPL Q1’Concall
- Growth in Q1’FY25 is largely driven by volume growth and not the price increase
- During Q1’FY25, formulation growth have been significant while technical growth have been steady
- During this quarter, commissioned the intermediate plant for backward integration for one of herbicide
- Revenue growth of 15-20% expected for FY’25
- Expecting the EBITA margins to reach between 18-20% from Q3’FY25 onwards
- Demand picking up in international markets
- 18-19% revenue from new molecules
- July’24 have been great in terms of business
- From Hamirpur plan, don’t expect revenue during current FY. From FY’26, significant contribution expected from this plant
- 110 Cr. capex required during current year will be funded from internal accruals
- Q1’25 capacity utilization Formulation plant-100%; Technical plan - 66%; The formulation plant capacity will increase in next 1-2 month
- For FY’26, the guidance for revenue growth about 15-20%
- Cash in hands about 140 Cr.
Disc - Invested
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Taking the guidance at the face value .
Let’s say they post 15-20% of growth in FY-25.
With margins of around 18-20% post Q3.
And around 13% in first two quarters.
They can safely post eps of around 10 INR for full FY.
I’m trying to understand what must be the multiples street would be comfortable with a stock like IPL.
Obviously that will change company to company.
But would the street be comfortable with the stock trading at 30 PE multiples?
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Has management specified any number that they are expecting coming from plant of hamirpur in FY26?
Or percentage contribution vs total sales for FY26 for plant of Hamirpur ?
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Yes. Management expects around 50-60cr in FY26 from Hamirpur.
There are news of Income tax inspection on the registered office. Any corporate governance issues anyone is aware of?
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Q3 FY 25 CONCALL HIGHLIGHTS
Total income of ₹175 crores, a growth of 13% year-on-year
Volume up 30%
Demand inquiries are stable, but pricing remains subdued, with an average price decline of around 15% year-on-year and 20% in the previous quarter.
capex is going on in hamirpur plant , all capex from internal accurals
Investment in Hamirpur site expected to contribute to revenue from FY’26 onwards.
inventory days going up
Expecting good sales growth in a rice herbicide from this qtr.
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Capacity Expansion - Is the incremental capacity getting added or are the price falls so severe that increased volumes are not contributing to topline or bottomline!
Feb 2022 PPT shows 21500 MT Technicals capacity and 6500 MT formulations capacity.
Feb 2025 PPT shows 24,200 MT technicals capacity and 6500 MT formulations capacity
Fixed Assets grown from 163 Cr March 2022 to 308 Cr in Sep 2024.
Are we missing something or have they really spent so much to increase just 2500+ MT technicals. Sure, they will say a lot of infrastructure also added in greenfield facility etc! Any thoughts on their capacity addition speed and realizations?
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The company has expanded its installed capacity for PEDA to 6,000 metric tonnes (MT) per annum. It has plans to further raise PEDA production capacity by an additional 2,500 MT per annum. This expansion is targeted for completion by the end of Q2 FY26. Once completed, the total PEDA manufacturing capacity will reach approximately 8,500 MT per annum.
Ministry of commerce and Industry has recommended imposition of anti dumping duty on Pretilachlor in any of its form and its intermediate “2,6-diethyln-(2-propoxy
ethyl)aniline” (also known as PEDA) for a period of 5 years.
Source: https://www.dgtr.gov.in/sites/default/files/FF%20Peda%20%20NCV%20English.pdf
http://www.dgtr.gov.in/anti-dumping-cases/anti-dumping-investigation-concerning-imports-pretilachlor-and-its-intermediate
Pretilachlor is used in herbicides used in rice cultivation to control weeds. It is primarily used as a pre-emergent herbicide, applied before weed seeds germinate and emerge from the soil. It effectively inhibits the growth of grassy weeds. It is typically used within 5 days of rice transplanting. The sales peak coincides with the rice transplanting season.
Also, company did mention in the last concall that they are building up inventory for a rice herbicide. I think its Pretilachlor.
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