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Incorporated in 1992, Heranba is a crop protection chemical manufacturer, exporter, and marketing company based in Vapi, Gujarat. The company manufactures Intermediates, Technicals, and Formulations. The company is a leading domestic producer of synthetic pyrethroids like cypermethrin, alphacypermethrin, deltamethrin, permethrin, lambda-cyhalothrin, etc. The pesticides range includes insecticides, herbicides, fungicides, and public health products for pest control. The company exports the products to more than sixty (60) countries in Latin America, CIS, Middle East, Africa, Asia, and South East Asia in Fiscal 2020.
Heranba has three manufacturing and packaging facilities in and around the industrial belt of Vapi, Gujarat having 174 reactors with an aggregate manufacturing capacity of 14,024 MTPA.
The company has an in-house R&D team for product development. Heranba’s new R&D facility shall become operational from Dec 2020. It is in process of developing 2 products of fungicides, 2 products of herbicides and 1product of Insecticides, for which research and development tests have been initiated, for exclusive sale to the European markets after registration with the regulatory authority in EU.
Strengths
Challenges
Heranba earned revenues of Rs 619.21 crore in H1FY21. The company’s PAT was Rs 66.31 crore in the corresponding year. Total revenues reduced marginally by 4% in FY20 to Rs 967.91 crore as against Rs 1011.84 crore in FY19. Though PAT in FY20 improved to Rs 97.75 crore from Rs 75.40 crore in FY19. The decrease in revenues was driven by a fall in sales in the last quarter of FY20 due to the lockdown.
The operating and the net margins show an increasing trend being 15.33%, 13.82%, and 12.5% for FY20, FY19, and FY18 respectively. Net margins were 10.10%, 7.45%, and 6.25% for the corresponding years.
Return on net worth is strong at 30.47% and 33.04% in FY20 and FY19 respectively.
Title | H1FY21 | FY2020 | FY2019 | FY2018 |
Total Revenue | 619.21 | 967.91 | 1011.84 | 750.41 |
PAT | 66.31 | 97.75 | 75.40 | 46.88 |
EBITDA | 100.14 | 145.88 | 138.80 | 93.13 |
Total Assets | 788.12 | 624.76 | 560.44 | 450.47 |
Cash and Bank | 25.28 | 3.19 | 20.97 | 11.78 |
Cash generated from Operations | 52.31 | 54.21 | 87.7 | 51.95 |
EBIDTA Margin | 16.19% | 15.33% | 13.82% | 12.50% |
Net margin | 10.71% | 10.10% | 7.45% | 6.25% |
Title | Rallis | Sumitomo | Bharat Rasayan | Punjab Chemicals | Heranba |
Face Value Per Share | 1 | 10 | 10 | 10 | 10 |
Total Income for FY20 (INR Crores) | 2286 | 2435 | 1231 | 562 | 967 |
EPS (as on 18th Feb 2021) | 11.37 | 6.3 | - | 35.28 | 25.03 |
NAV per share | 72.51 | 24.48 | 1327.73 | 79.72 | 82.14 |
Return on net worth | 13.11% | 16.75% | 27.94% | 11.00% | 30.47% |
P/E (as on 18th Feb 2021) | 22.9 | 47.33 | 26.87 | 24.29 | 25.05 |
P/B(as on 18th Feb 2021) | 3.6 | 12.19 | 7.17 | 10.75 | 7.63 |
Title | EPS | P/E | NAV | P/BV |
Parameters | 25.03 | 25.05 | 82.15 | 7.63 |
Agrochemicals have gained popularity in the agriculture industry in recent years because they help farmers boost their crop quality and quantity as well. It is expected that the global agrochemicals market would grow at a CAGR of 4.11% during 2020-2025, reaching a value of US$ 73.39 billion by 2025.
Heranba is a leader in the pyrethroid segment. It offers a diversified range of products globally. Increasing revenues, reasonable margins, and future growth prospects of the company are the positives for the company. The IPO appears to be fully priced at P/BV of 7.63 and P/E of 25.05 when compared to its peers. Hence, Investors may subscribe to the IPO.
Review By CA Priyanka Choudhary on 10th Feb 2021
About CA Priyanka Choudhary
Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.
Email: [email protected]
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