Sharekhan's research report on Insecticides (India)
In-line Q1FY22 operating profit at Rs. 53 crore (up 7.9% y-o-y) as higher-than-expected revenue growth of 14.3% gets offset by 116 bps miss in OPM at 11.3%. PAT at Rs. 35 crore (up 1.7% y-o-y) missed our estimate due to lower other income. Strong revenue growth was driven by 28.7%/179.4% y-o-y rise in institutional/export sales while branded sales growth were muted at 2% y-o-y. Rise in share of low-margin institutional sales and higher costs led to a contraction in margin. The management reiterated revenue growth guidance of 10-12% y-o-y for FY2022 and expects gradual pick up in margins to 15% led by a rise in share of high margin-new generation products and backward integration.
Outlook
We maintain Buy on the stock with an unchanged PT of Rs. 900, as we expect a strong 29% PAT CAGR over FY21-FY24E, RoE of 18% and balance sheet is also strong. Valuation of 8.6x/6.7 its FY23E/FY24E EPS is attractive.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More