India Pesticides Ltd launched its three-day initial public offering (IPO) on June 23. It is the fifth major public issue to hit the Indian markets this month. In this article, we take a closer look into the company and its IPO. 

Company Profile – India Pesticides Limited

India Pesticides Limited (IPL) is engaged in the manufacturing and sales of agrochemicals in India. It was incorporated in 1984. The company offers herbicide and fungicide technicals. They are the sole Indian manufacturer of five technicals and among the leading manufacturers globally for Captan, Folpet, and Thiocarbamate herbicide (in terms of production capacity). The company also manufactures over 30 formulations of herbicides, insecticides, and fungicides. These are all essential inputs that protect crops from pests and fungus. IPL also offers Active Pharmaceutical Ingredients (APIs)— the raw materials used for making drugs.

Their technicals are exported to more than 25 countries across Asia, Africa, Europe, and the Americas. The exports contributed ~62% to the total technical segment revenues in the financial year 2019-20 (FY20). IPL’s agrochemical formulations are primarily sold to prominent crop protection manufacturers such as Syngenta Asia Pacific, UPL Limited, Ascenza Agro S.A., Conquest Crop Protection Pty., Sharda Cropchem Ltd, and Stotras Pty.

India Pesticides has two manufacturing plants in Uttar Pradesh. The aggregate installed capacity of the plants is 19,500 million tonnes (MT) for agrochemical technicals and 6,500 MT for formulations. The company is reportedly constructing two new manufacturing units, which will be used for producing herbicide technicals.

IPL is well-known for its Research & Development (R&D) capabilities. They have focused extensively on expanding their product portfolio and growing their customer base. The company is run by experienced promoters and a strong management team, led by Anand Swarup Agarwal. He has over 35 years of experience in agrochemical manufacturing.

About the IPO

In May 2021, India Pesticides received approval from market regulator SEBI to raise funds via an initial public offering (IPO). The public issue opens on June 23 and closes on June 25. The total issue size of the IPO is Rs 800 crore. This comprises a fresh issue of ~33.78 lakh shares, aggregating up to Rs 100 crore. It also includes an offer for sale (OFS) of up to Rs 700 crore by existing shareholders. The price band for the IPO has been fixed at Rs 290-296 per share.  

Individual investors can bid for a minimum of 50 equity shares (1 lot) and in multiples of 50 shares thereafter. You will need a minimum of Rs 14,800 to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 650 equity shares (13 lots). However, if you are planning to apply for more than 1 lot, keep in mind that your capital may get blocked for no reason if the IPO is oversubscribed.

India Pesticides plans to utilise the net proceeds from the IPO for two main purposes:

  1. To finance the working capital requirements of the company
  2. To meet general corporate purposes

The total promoter holding in the firm will reduce from 82.68% to 72% post the successful completion of the IPO.

Financial Performance

India Pesticides has consistently posted strong growth in revenues and profits over the last three financial years. It seems that the Covid-19 pandemic has not affected the company’s financial performance at all, despite having to temporarily shut down manufacturing units amidst strict lockdowns. Its revenues have jumped by 90.5% during FY19-FY21. Its net profit increased by 90% YoY to Rs 134.5 crore, and total income by 33.8% YoY in FY21. EBITDA margin has increased from 20.7% in FY19 to 29.2% in FY21. The rising demand for the various agrochemical products they offer will continue to drive overall financial growth.

The company’s Return on Capital Employed (ROCE) stands at 45.18%, which is very high when compared to its peers in the Indian agrochemical industry. It means that for every Rs 100 worth of capital employed, IPL earns Rs 45.18 on it. The Return on Equity (RoE) of 34.5% is also quite high when compared to competitors. Over the last three years, the company has posted an average Earnings Per Share (EPS) of Rs 8.8. 

Risk Factors

  • The company requires certain approvals and licenses to manufacture and sell its products in India and across the globe. This includes registrations from the Central Insecticides Board and Registration Committee (CIBRC). If they fail to obtain such registrations or get their licenses renewed, it could adversely impact the firm’s operations and financial performance. 
  • The operations conducted by India Pesticides are subject to regular inspections or audits by its customers. The failure to meet quality standards and technical specifications prescribed by customers may lead to loss of business. This would negatively impact the company’s reputation and financial results.
  • IPL has to comply with strict regulations of various international markets where they sell their products. Thus, its global operations are subject to regulatory risks that could negatively affect its overall performance.
  • The failure to identify or understand evolving industry trends or the inability to develop new products to meet customer demands may adversely affect its business/financial growth.
  • Seasonal variations or unfavorable weather patterns may have a negative impact on IPL’s sales growth.
  • The revenue derived from India Pesticides’ top 10 customers represents around 69.3% of its overall sales income (as of Sept 30, 2020). The loss of any one of these customers or even a reduction in purchases by them will negatively affect financial results.

IPO Details in a Nutshell

Axis Capital, JM Financial, and KFin Technologies Pvt Ltd. have been selected as the book-running lead managers to the public issue. India Pesticides had filed draft papers for its IPO in February 2021. You can read it here.

Ahead of the public issue, IPL was able to raise Rs 240 crore from 12 anchor investors. This includes foreign portfolio investors (FPIs) such as Abu Dhabi Investment Authority (ADIA), Integrated Core Strategies, Wells Fargo, Tara Emerging Asia Liquid Fund, Plutus Wealth Management, and BNP Paribas.


Based on the current demand trends in the market, India Pesticides expects to stabilise growth rates and improve EBITDA margins to over 31% in the upcoming quarters. They will continue to focus on R&D activities to launch new products and gain a better market share. Agrochemical manufacturers like IPL will continue to ensure enhanced food security in India and many countries across the globe. The company’s IPO is likely to attract significant investor participation due to its impressive financial track record and diversified portfolio. 

Once it gets listed, India Pesticides Ltd will be directly competing with major players such as UPL, PI Industries, Rallis India, Sumitomo Chemical, Dhanuka Argitech, Bharat Rasayan, and many more. You can also check out our recent analysis of certain fertilizers and agrochemical companies here.

Before applying for the IPO, we will wait to see if the portion reserved for institutional investors gets oversubscribed. The issue was subscribed 1.29 times on the first day of bidding (June 23). The portion reserved for retail investors was subscribed 2.51 times, and that of Non-Institutional Investors (NIIs) was subscribed 19%. 

What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.