Should You Buy The Shares Of India Pesticides After The Listing?

Shares of India Pesticides listed strongly on Monday with a premium of nearly 18 to 20 per cent against its issue price of Rs 296. It got listed at Rs 360, but saw some profit booking and was last seen trading at around the Rs 340 levels.

At the National Stock Exchange, the firm debuted at Rs 350, witnessing a jump of 18.24 per cent. The initial public offering of India Pesticides was subscribed 29 times last month. The price range for the Rs 800-crore offer was Rs 290-296 per share. India Pesticides is an R&D-focused agrochemical technical company, which has growing formulations business in herbicides, insecticides, and fungicide segments. It also manufactures active pharmaceutical ingredients.

Should you buy the shares of India Pesticides?

Some brokerages see the presence of India Pesticides in the fast growing agrochemicals space as a big positive to buy into the shares.

"We like IPL given its presence in fast growing agrochemical space, diversified product portfolio and robust financials. Expanding product portfolio, growing customer base and increasing wallet share of existing customers can help IPL maintain its growth momentum. It is reasonably valued at 30.8x FY21 P/E, vis-à-vis peers, while it enjoys higher RoE of 36%," says Sneha Poddar, AVP, Research, Broking & Distribution, Motilal Oswal Financial Services Ltd.

India Pesticides listed strongly on the exchanges today with 21% premium at Rs 360 per share against its issue price of R s 296 per share, she adds.

According to her the company had seen healthy overall subscription of 29 times, given its presence in the fast growing agrochemical space.

"India Pesticides Ltd is the sole Indian manufacturer of five TECHNICALS and among the leading manufacturers globally for Captan, Folpet and Thiocarbamate Herbicide, in terms of production capacity. Global agro-chemicals market is expected to grow at 7% CAGR to USD 86 bilion by 2024 and IPL is well placed to tap this opportunity. Technicals in India which is strongly driven by export led demand and contract manufacturing, is expected to grow at 8% CAGR.

With China+1 strategy, it opens huge opportunity for Indian players like IPL. IPL plans to tap this opportunity by manufacturing complex off patented technicals, wherein 19 Technicals are expected to go off-patent between CY19-26 (opportunity of >USD4.2bn)," she adds.

At the time of the IPO several brokerages had said to go and buy or subscribe to the shares. Given the over subscription investors who had not got an allotment could probably see an opportunity to buy on listing. Broking firms like Anant Rathi, Reliance Securities, Arihant Capital, HEM Securities etc., had a subscribe at the time of the Initial Public Offering of India Pesticides.

Disclaimer

The stock mentioned above is largely based on comments from broking firm Motilal Oswal. Investing in stocks is risky and investors should do their own research. The author, the brokerage firm or Greynium Information Technologies Pvt Ltd is not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as markets have run-up significantly.