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    CRISIL Agrochem

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    Sandy
    The document summarizes the outlook for the agrochemical sector in India over the next two fiscal years. It states that while revenue growth will remain double-digits at 12-13% this fiscal and 10-12% next fiscal due largely to robust export demand, domestic sales growth will slow to 8-9% this fiscal and 8-10% next fiscal due to uneven monsoon and slower rural income growth. Rising input costs will cause operating margins to moderate to around 13% from 14.5% last fiscal, though healthy balance sheets will keep credit profiles stable. Export demand and investments in new product registrations and capacity will support revenue growth and credit metrics despite higher working capital needs from rising costs and export focus.

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    CRISIL Agrochem

    Uploaded by

    Sandy
    20 views2 pages
    The document summarizes the outlook for the agrochemical sector in India over the next two fiscal years. It states that while revenue growth will remain double-digits at 12-13% this fiscal and 10-12% next fiscal due largely to robust export demand, domestic sales growth will slow to 8-9% this fiscal and 8-10% next fiscal due to uneven monsoon and slower rural income growth. Rising input costs will cause operating margins to moderate to around 13% from 14.5% last fiscal, though healthy balance sheets will keep credit profiles stable. Export demand and investments in new product registrations and capacity will support revenue growth and credit metrics despite higher working capital needs from rising costs and export focus.

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    CRISIL_Agrochem

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    The document summarizes the outlook for the agrochemical sector in India over the next two fiscal years. It states that while revenue growth will remain double-digits at 12-13% this fiscal and 10-12% next fiscal due largely to robust export demand, domestic sales growth will slow to 8-9% this fiscal and 8-10% next fiscal due to uneven monsoon and slower rural income growth. Rising input costs will cause operating margins to moderate to around 13% from 14.5% last fiscal, though healthy balance sheets will keep credit profiles stable. Export demand and investments in new product registrations and capacity will support revenue growth and credit metrics despite higher working capital needs from rising costs and export focus.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    20 views2 pages

    CRISIL Agrochem

    Uploaded by

    Sandy
    The document summarizes the outlook for the agrochemical sector in India over the next two fiscal years. It states that while revenue growth will remain double-digits at 12-13% this fiscal and 10-12% next fiscal due largely to robust export demand, domestic sales growth will slow to 8-9% this fiscal and 8-10% next fiscal due to uneven monsoon and slower rural income growth. Rising input costs will cause operating margins to moderate to around 13% from 14.5% last fiscal, though healthy balance sheets will keep credit profiles stable. Export demand and investments in new product registrations and capacity will support revenue growth and credit metrics despite higher working capital needs from rising costs and export focus.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Press Release

    January 31, 2022 | Mumbai

    Agrochem players to log double-digit growth next fiscal, too


    Input costs to pare margins; balance sheets to keep credit profiles stable
    Exports will help the agrochemical sector maintain double-digit growth in revenue this fiscal and the next — at 12-13%
    and 10-12%, respectively, compared with 15% last fiscal — even as domestic sales growth will be stunted by uneven
    monsoon and slower increase in rural incomes.

    Steep rise in prices of inputs, especially imported, will lead to a moderation of 150-250 basis points (bps) in operating
    profitability in the two fiscals. However, healthy cash accruals and balance sheets will ensure credit profiles remain
    stable despite an expected increase in working capital and capital spend.

    An analysis of 28 companies rated by CRISIL Ratings and accounting for ~80% of the ~Rs 53,000 crore agrochemical
    sector indicates as much. The sector derives equal revenue from exports and domestic sales.

    Says Anuj Sethi, Senior Director, CRISIL Ratings, “The China +1 procurement model has been a key tailwind
    for Indian players as large export consumers are diversifying their supplier base. This along with continued
    healthy demand from Brazil and the US (~45% of India’s exports) and increasing supplies to Europe (~15% of
    India’s exports) will lead to exports growing by ~15% this fiscal and 12-13% in the next. Consequently, the
    share of exports in overall revenue is expected to rise to ~53% by fiscal 2023.”

    On the other hand, after strong growth of ~20% last fiscal, domestic demand growth will see a sharp moderation to 8-
    9% this fiscal, with uneven monsoon impacting offtake during the key kharif season (June-October) and moderately
    impacting rural incomes. Also, area under sowing has grown just ~1% this rabi season (October-February).

    Next fiscal, assuming normal monsoon and modest increase in area under cultivation as well as better rural incomes,
    domestic growth will remain stable at 8-10%.

    Meanwhile, the prices of key inputs such as glyphosate, glufosinate, imidacloprid and bifenthrin, which are linked to
    crude and phosphorous, have increased almost 30% since March 2021. With slowing domestic demand and high
    competitive intensity rendering players unable to pass on the input price increase entirely, operating margins are likely
    to slip to ~13% in fiscals 2022 and 2023 from ~14.5% in fiscal 2021.

    Says Sandeep Narayanan, Team Leader, CRISIL Ratings, “With export demand remaining robust and product
    registrations increasing, capital spend will rise to Rs 5,000-5,500 in each of the next two fiscals from Rs 4,200
    crore last fiscal. Working capital requirement will also rise due to higher cost of inventory and increasing
    exports, where credit period is higher. That said, prudent funding of the incremental working capital and
    capital spend will keep gearing comfortable at 0.3-0.4 time until fiscal 2023 (0.24 time in fiscal 2021) while
    interest cover ratio is expected to sustain at ~9 times.”

    In the milieu, intensity and spread of the next monsoon, sowing levels in the rabi and kharif seasons, and trends in raw
    material prices remain key monitorables.

    1
    For further information contact:
    Media relations Analytical contacts Customer service helpdesk
    Pankaj Rawat Anuj Sethi Timings: 10.00 am to 7.00 pm
    Media Relations Senior Director Toll free Number:1800 267 1301
    CRISIL Limited CRISIL Ratings Limited
    M: +91 99 872 61199 B: +91 44 6656 3100 For a copy of Rationales / Rating Reports:
    B: +91 22 3342 3000 [email protected] [email protected]
    [email protected]
    Rajeswari Karthigeyan For Analytical queries:
    Naireen Ahmed Associate Director [email protected]
    Media Relations CRISIL Ratings Limited
    CRISIL Limited B: +91 44 6656 3100
    D: +91 22 3342 1818 [email protected]
    M: +91 90 040 84769
    B: +91 22 3342 3000 Sandeep Narayanan
    [email protected] Team Leader
    CRISIL Ratings Limited
    D: +91 22 4047 2667
    [email protected]

    About CRISIL Ratings Limited (A subsidiary of CRISIL Limited)


    CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and
    innovation, we set the standards in the credit rating business. We rate the entire range of debt instruments, such as, bank loans,
    certificates of deposit, commercial paper, non-convertible / convertible / partially convertible bonds and debentures, perpetual
    bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt
    instruments. We have rated over 33,000 large and mid-scale corporates and financial institutions. We have also instituted several
    innovations in India in the rating business, including rating municipal bonds, partially guaranteed instruments and infrastructure
    investment trusts (InvITs).

    CRISIL Ratings Limited ("CRISIL Ratings") is a wholly-owned subsidiary of CRISIL Limited ("CRISIL"). CRISIL Ratings Limited is
    registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").

    For more information, visit www.crisilratings.com

    About CRISIL Limited


    CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading
    ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations.

    CRISIL is majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics
    and data to the capital and commodity markets worldwide.

    For more information, visit www.crisil.com


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    This Press Release is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The Press release may be used by you in
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    CRISIL Ratings has taken due care and caution in preparing this Press Release. Information has been obtained by CRISIL Ratings from sources which it considers
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