Anand Rathi has given Buy recommendation for Heranba Industries with a target price of Rs. 745 in its research report issued on Sep 12, 2022
Anand Rathi’s research report on Heranba Industries
The company is a crop protection chemical manufacturer, exporter and marketing company based out of Vapi, Gujarat, with Corporate and Administration Offices in Mumbai. It manufactures Intermediates, Technicals and Formulations & is one of the leading domestic producers of synthetic pyrethroids. Its Pesticides range includes insecticides, herbicides, fungicides and public health products for pest control. The company’s business mix include: Domestic Institutional sales of Technicals (35%), Technicals Exports (32%), Domestic Formulations (23%) and Formulations Exports (10%). The company reported disappointing set of numbers for the quarter under review with revenue growth of 3.0% year-on-year to ₹3,619 million on standalone basis due to challenging macro-economic developments and late onset of monsoon in the domestic market. However, the management highlighted that the company’s products are experiencing a pickup in demand due to good rainfall across India and a healthy reservoir level, setting a positive sentiment for the agro chemical industry. On profitability front, the EBITDA from operations for the quarter declined by 28.6% year-on-year at ₹463 million with an operating margin of 12.8%. The company achieved the reported PAT of ₹337 million, a decline of 28.9% year-on-year with a net margin of 9.3% translating into EPS of ₹8.42 per share for the quarter.
Outlook
We are positive on Heranba Industries Ltd, the company has diverse product range, strong margins, strong balance sheet, capacity expansion and further opportunities from off patent products in highly regulated markets. We maintain BUY rating on the stock with a revised target price of ₹745 per share.