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Insecticides India Ltd. reported strong revenue growth of 19.7% YoY in Q1 FY23, led by strong growth across geographies and market share gains (our view).
Ebitda margin was down 91 basis points YoY, despite gross margin expansion. Company was granted a new patent in July 2022 (after two in April 2022). These products will likely lead to higher margins in the medium to long term.
Insecticides has incorporated a subsidiary to foray into organic farming products. We remain positive on Insecticides India due to:
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its focus on distribution expansion;
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removal of generic products from the product portfolio and launch of differentiated products; and
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backward integration of technicals.
We estimate an earnings compound annual growth rate of 16.5% over FY22-FY24E and return on equity to move to 13.7% in FY24E. We revise our FY23E-FY24E earnings to factor-in the Q1 FY23 performance and grant of new patents to the company.
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