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SPA Securities
Insecticides India (Buy)
CMP: ₹719.50
Target: ₹1,210
Insecticides India an agrochemical manufacturer, commands a market share of about 6-7 per cent in India. IIL has a product portfolio of 120 formulation and 24 technical products. The Indian agrochemical industry is expected to grow at a CAGR of 12 per cent between FY14-19E (FICCI). Given the government’s focus on reducing poverty and hunger, feeding the world’s second largest population will be a mammoth task. Prevention of crop losses is the immediate requirement to bridge the demand-supply gap in food grains which necessitates deeper penetration of agrochemicals thus putting agrochemical companies such as IIL in a sweet spot. With several triggers (higher technical sales, potential opportunity from new licensing molecules, molecules going off patent and invention of new molecules and low capex requirements) in place, IIL is set for incremental gains going forward. Topline and bottomline is expected to grow at a CAGR of 23 per cent and 32 per cent, respectively, between FY15E-17E.
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