Insecticides continued new product launches during the quarter. ICICI Securities remains positive on Insecticides due to focus on increasing farmers’ penetration, removal of generic products from the portfolio and backward integration of technical.

Insecticides India’s Q3FY22revenue grew 4.9% YoY; EBITDA and adj. PAT grew 23.3% and 36% YoY, respectively, EBITDA margin was up 88bps YoY in-spite of higher input prices. Exports business clocked ~Rs1000mn in 9MFY22, meeting the FY22 targets in 9M itself.

Q3FY22 result: Insecticides India revenue EBITDA and adj. PAT growth of 4.9%, 23.3% and 36% YoY, respectively, led by higher gross and EBITDA margins, up 330bps and 88bps YoY, respectively. However, PAT margin was up 54bps YoY. Staff costs and other expenditure as a % of sales also increased 51bps and 191bps YoY, respectively.

Segment-wise revenue mix in 9MFY22: Insecticides continued to dominate the revenue mix with 52% of the sales contribution, followed by herbicides at 34% and fungicides at 11%. B2C, B2B and exports contributed 66%, 26% and 8% of the company’s net sales.

Steady launch of new products: Insecticides India was granted a patent for an herbicidal formulation in Nov’21, for a period of 20 years. The company launched two new products during Q3 and also plans to introduce new products in Q4. We believe company’s investment in R&D to launch new formulations will likely result in healthy profitable growth in medium- long term.

Management guidance: The company guided for – (1) ~10% revenue growth in FY22, (2) ~100bps improvement in EBITDA margin, (3) double exports next year and (4) Rs680mn capex during FY22.