Recommendation

As per CA Ajay Chouhan, SEBI Registered Research Analyst, recommendation is to ‘Subscribe’ for ‘Long Term’ and ‘Listing Gains’. India Pesticides is generating 56.7% of their revenues from exports which shows its strong presence in the global markets. The company holds a long-term relationship of over 10 years and some of their key customers include crop protection majors, such as, Syngenta Asia Pacific Pte. Ltd. and UPL Limited. On financials front, he company is growing its revenues at a at an annual growth of 38%. EBITD margins of the company stand at 28.9% much higher than the listed peers. Company might be capitalizing on equity as they a small amount Rs. 22.5 crores of debt on their balance sheet. Debt-Equity ratio of the company is 0.02x, which won’t have any effect on the credit worthiness of the company. The company will utilize the net proceeds for working capital requirements as the cash flows of the firm are not lucrative. Considering the upper price band at Rs. 296 and FY20 Earning Per Share (EPS) of 12.07, the company is demanding a P/E multiple of 24.52x, much lower than the Industry P/E of 59.22.