Hi… kalpesh …how you see when you start comparing the PE of india pesticides with PI industries PE. Infact dharamraj (with recent run up also) seems to be good bet in comparison to india pesticide as far as valuation comfort. Please help me what I am missing which you are seeing about India pesticides.
Kalpesh, can you please share the link to the GPCB notice. I have started a tracking position but was not sure about this red flag. I may have to rethink and tweak my strategy if it is very alarming. thanks.
India Pesticides Ltd
Hi @thakurvi,
First of all I have invested big chunk of my NetWorth in Agrochemical sector, but I must confess that I’m newbie in this sector, don’t understand much but trying to learn.
I think comparing IPL with PI is not fair, PI serves mostly big MNC’s and its business is in different orbit. PI has proved time and again that its not a cyclical business. I would have certainly invested in PI at this PE but I know returns will be not great. at least will not serve my expectations.
Also I would recommend you to calculate PE at normalised earning and not depressed earnings(Also check forward PE of both with 4 year forward earnings). You can also check P/B which is more stable and reliable metric.
Dharmaj Crop is a formulation focused company, while IPL is Technical and intermediate focussed company. As per my view formulation is a difficult business to be in, because you have to constantly launch new formulations every few years as corps develop resistance to it.
Technical/intermediate is also difficult products to develop but once you develop that you can sell it for many years and keep scaling up manufacturing capacity, where your chances of winning(at scaling up) are very high.
Dharmaj is trying to backward integrate into Intermediates, where they do not have much prior experience, so my take on them succussing in it is 50-50 chance(I do not track Dharmaj, so take my view with pinch of salt).
Margin profile :
- IPL is highly backward integrated and their main competitor is in Israel, you know how forward Israel is in developing technologies, you can guess what kind of work IPL is doing.
- Dharmaj is into formulations so they buy technical and intermediates from others and just mix them and sell, their main job is to market it and develop distribution/retailer network.
You can see the difference between margin profiles of both companies.
Whats discounted in price :
-
IPL is facing worst demand side issue in history, and their revenues and margins are at low level(margins at historically low levels)
-
Dharmaj is india focused business where it is not going through revenue & margins declines, also India Agchem is not facing any demand side issues.
So i’ll not bet on any expectations of big PE expansion for this company.
Recently launches of IPL are into import substitute from China, that is where they are facing hit at their face at the moment. Agchem industry has suggested for anti dumping duty, gov may do it, that will be first trigger,
Second trigger will come from global demand come back, people behave irrationally so does corporates, they will bring down inventory to the unsustainably low level out of fear and because competitors are doing so. and once the demand come back there will come huge demand out of nowhere, and companies like IPL can make great margins and huge revenue growth, and so huge PE expansion.
Risk: Some of Indian peers are doing capex for products where IPL is market leader.
Disc: Invested and heavily biased, these are my views and I can be wrong, not a investment advice.
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Hi Kalpesh…Have you checked the reasons for sudden LCs with heavy vol in March in this counter…Last qtr too FIIs reduced stake…Any corporate issues, which we don’t know?
No.
but I suspect it was due to some people knew in advance that 4th quarter result is going to be bad.
(They might be tracking raw material prices/final product prices)
| Equity Portfolio | ||||
|---|---|---|---|---|
| NAME OF COMPANY | CMP 07-08-2024 | Allocation | UNREALISED GAIN | |
| AVG INVST PRICE | ||||
| SRG Housing Finance | 204.28 | 389.80 | 30.9% | 90.8% |
| Punjab Chemicals | 772.45 | 1,239.60 | 20.2% | 60.5% |
| Mitsu | 149.87 | 146.50 | 3.1% | -2.2% |
| Innova Captab | 499.09 | 628.85 | 7.9% | 26.0% |
| IRM Energy | 537.21 | 452.90 | 5.4% | -15.7% |
| Prevest Denpro | 377.47 | 611.15 | 4.6% | 61.9% |
| Prime Fresh | 200.29 | 199.00 | 10.4% | -0.6% |
| India Pesticides | 216.50 | 210.23 | 9.2% | -2.9% |
| Transpek | 1,750.76 | 1,708.75 | 8.2% | -2.4% |
| CASH | - | 0.0% | 0.0% | |
| EQUITY | 100.0% |
1 Like
Sold Transpek
Sold Mitsu
Planning to sell IRM & IPL too.
Feeling fearful in current market, want to be on cash.
I’m also in process of shifting my investment strategy from 3-5 years trades to 10 year horizon.
3-5 year trades have provided me so much capital that interest from my bond portfolio alone is enough to feed my family for prolong period, that allows me to go for very long horizon investments.
3 Likes
Just curious, what’s your bond:(equity + cash) split as %?
With recent good portfolio appreciation I’m on the verge of getting out of corporate, would like to get good ideas of how to plan sustenance account + growth portfolio.
Till now my idea was to simply have 5 years worth of expenses in (savings + FD) and rest for growth portfolio.
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If closing the business aligns with your goals and provides financial security, it might be a prudent choice.
Bond portfolio 31%
Equity+cash portfolio 69%
At 9-10% interest income from bonds is more than enough for yearly expenses of my family.
Bonds provides me emotional comfort to be cool & calm in market drawdowns.
6 Likes
What kind of bonds are you holding? Do you have both debt MF and individual bonds from companies and government or only bonds? If you can also mention the reasons for choosing them, that would be helpful.
Received many personal messages about bond portfolio, putting it all here so that all can see it.
| Name of bond Issuer | Guarrontor | Coupon | % of bond portfolio |
|---|---|---|---|
| ANDHRA PRADESH CAPITAL REGION DEVELOPMENT AUTHORITY | State gov backed | 10.32% | 43% |
| AVANSE FINANCIAL SERVICES LIMITED | Senior secured | 9.25% | 6% |
| U.P. POWER CORPORATION LIMITED | State gov backed | 9.95% | 22% |
| VEDIKA CREDIT CAPITAL LTD | Senior secured | 11.90% | 8% |
| VASTU FINSERVE INDIA PRIVATE LIMITED | Senior secured | 9.55% | 21% |
I invest through Indiabonds & GoldenPi, so far have very good experience through both.
I do not have debt MF fund right now but I do use debt MF to park temporary cash from Equity portfolio.
Note : Not a investment advice, have invested in those bonds in CY2023 and some in CY2024.
8 Likes
Thank you for sharing it, very useful.