Sharekhan has given Buy recommendation for Insecticides (India) with a target price of Rs. 1170 in its research report issued on Aug 17, 2022
Sharekhan’s research report on Insecticides (India)
In-line operating profit of Rs. 58 crore (up 10% q-o-q) as stronger-than-expected revenue growth of 20% y-o-y was offset by a miss in margins. PAT of Rs. 38 crore (up 9.6% y-o-y) was 2% above our estimate due to lower-than-expected tax rate. Strong revenue growth was led by 21%/31% y-o-y revenue growth from B2C/B2B business. OPM miss of 87 bps was due to lower-than-expected gross margin and FX loss of Rs. 6.5 crore. Adjusted OPM of 11.6% was slightly better than our estimate of 11.3%. Management maintained its double-digit (18-20% y-o-y) revenue growth and margin guidance of a 100 bps rise for FY23. It expects a similar growth momentum in FY24. However, the company lowered export revenue guidance by 25% to Rs. 150 crore.
We maintain a Buy on Insecticides (India) Limited with a revised PT of Rs. 1,170 as we expect a strong 34% PAT CAGR over FY22-FY24E. Valuation of 13.7x/10.4x its FY2023E/FY2024E EPS is attractive.