4 Agrochemicals Stocks To Buy by Anand Rathi

Agrochemicals India I Equities
Initiating coverage 1 January, 2024
Agrochemicals: This time it’s different Sensex: 72240

Nifty: 21731
Himanshu Binani | Research Analyst

Anand Rathi Share and Stock Brokers Limited (hereinafter “ARSSBL”) is a full-service brokerage and equities research firm and the views expressed therein are solely of ARSSBL and not of the
companies which have been covered in the Report. This report is intended for the sole use of the Recipient. Disclosures are present in the Appendix.
Agrochemicals: This time it’s different
After a series of one-off events globally, starting from the Covid-19 pandemic to escalated geo-political tensions arising from the Russia-
Ukraine and Israel-Hamas wars, the need to secure food supplies has become the top priority for every nation. Consequently, we believe that
the structural growth story of the agrochemicals sector is intact, impelled by a) rising domestic demand; b) shrinking arable land (rising yields
being the only way out); c) substantial opportunities to explore products going off-patent in the next decade; d) stringent environmental
norms in China, offering domestic manufacturers an edge and e) strategic tie-ups with global giants
▪ Current slowdown not as bad as the last one. Domestic agrochemicals companies (those we initiate here) clocked 8.7% revenue CAGR over FY14-16 as two consecutive years of
below-normal rains (FY15 and FY16), greater channel stocks and pressure on farm incomes curbed sales. Cash-flows were strained, and the below-normal monsoons led to industry-wide
muted volume and price cuts. We believe that the pressure this time will not be as severe as during the last slowdown (FY15/16) given a) on-ground demand is strong unlike during the
last slowdown when farmers had down-traded to second-rate products driven by pressure on farm output prices; b) green shoots visible in terms of moderation in channel stocks across
regions (barring US markets); c) Crop prices (domestic and global) continue to be remunerative; d) the government’s thrust on improving farm income; e) expectations of special aid from
the government to the farming community in case of crop damage or losses (due to adverse weather, etc.) given Lok Sabha elections next year
▪ Improving farm economics. The government’s thrust on doubling farmers’ incomes via a) higher MSPs for crops (average 22% increase across crops in the last five years); b) more
area under irrigation (currently ~52% of net sown area, against ~40% a few years back (implies greater crop yields); c) heightened procurement efficiencies and d) higher agricultural
credit, augurs well for the sector. We believe efforts to boost crop yields and farmers’ awareness of crop-protection benefits would drive domestic demand in agrochemicals
▪ Off-patent molecules to power growth. Agrochemicals worth ~$6bn are going off-patent globally by 2030. We believe generic companies especially in developing countries
(where they have limited R&D facilities as well as less balance-sheet strength to carry these costs) would be major beneficiaries as a) these molecules already come with greater
efficacy to fight specific pests and have better markets and targeted crops; hence it is easy for generics manufacturers to lever their distribution networks; b) generics manufacturers
break the exclusivity of molecules/companies; hence, such products no longer enjoy a pricing advantage and it becomes easier for farmers to adopt such products. We believe this
augurs well for domestic agrochemicals manufacturers as it would result in the opening up of huge opportunities for domestic companies, both in domestic formulations as well in
exports
▪ We initiate coverage on four companies in this report, recommending Buys on Bayer Crop Science, Dhanuka Agritech, Sumitomo Chemicals and UPL
Current slowdown not as bad as the last one
▪ On-ground demand is still sturdy unlike during the last slowdown when farmers Domestic agrochemicals companies’ revenue growth over the years, %
down-traded to second-rate products, driven by pressure on farm output prices Higher growth due to Bayer Monsanto, UPL and
▪ Green-shoots evident in terms of modest channel inventories across regions 80% Arysta acquisitions
(barring the US) 70%
60%
▪ Crop prices continue to be remunerative both domestically and globally 50%
▪ The government’s thrust on raising farm income 40%
30%
▪ Expectations of special aid from the government to the farming community in case 20%
of crop damage or losses (due to adverse weather, etc.) given the Lok Sabha 10%
elections next year. 0%
-10%
-20%
Q1F13
Q3F13
Q1F14
Q3F14
Q1F15
Q3F15
Q1F16
Q3F16
Q1F17
Q3F17
Q1F18
Q3F18
Q1F19
Q3F19
Q1F20
Q3F20
Q1F21
Q3F21
Q1F22
Q3F22
Q1F23
Q3F23
Q1F24
Prices of major crops ($/tonne) under pressure during the last slowdown (FY15-16) Average
Corn Wheat Soybean Cotton

400 12 20 350
350 18
10 300
300 16
14 250
250 8
12 200
200 6 10
150
150 8
4 6
100 100
2 4
50 50
2
0 0 0 0
Oct-14
Oct-16
Oct-18
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
Oct-13
Oct-15
Oct-17
Oct-19
Oct-20
Oct-21
Oct-22
Oct-23
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
Oct-17
Oct-18
Oct-19
Oct-20
Oct-21
Oct-22
Oct-23
Oct-06
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
Oct-17
Oct-18
Oct-19
Oct-20
Oct-21
Oct-22
Oct-23
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
Oct-17
Oct-18
Oct-19
Oct-20
Oct-21
Oct-22
Oct-23
Source: GOI; Anand Rathi Research 3
Current slowdown not as bad as the last one (Cont.)
Commentaries from global agrochemical companies suggest healthy on-ground demand
Companies 3QCY23- Commentary CY23 Outlook
NAFTA - Channel and diamide partners have been reducing inventory resulting in lower volumes. However, in Canada branded diamides experienced
robust growth, primarily led by increased insect pressure. New products contributed to 28% of the branded sales in the last 5 years. • Revenue is expected to be in the range of $4.48bn-$4.72bn a
LATAM - Destocking was much worse than anticipated in Brazil. Despite this, on-ground application remains steady as growers continue to protect their decline of 21% YoY, led by lower volumes.
crops. • EBITDA is expected to be in the range of $0.97bn-$1.03bn, down
FMC EMEA - Branded diamides continued to outperform as against the rest of the product portfolio. FX continues to be a headwind. However, during the quarter, 29% YoY.
company saw price increase of more than 10%.
Asia - Adverse weather conditions in Australia, Indian and some parts of ASEAN countries continued to hurt company's performance. Branded diamides
continued to see good growth during the quarter. Inventory reduction efforts by channel partners has led to lower volumes. Forex continues to be a
headwind.
Crop Protection business:
• Volumes declined during the quarter, primarily led by exit from key regions(Russia) coupled with lower uptick in the crop protection business. • Revenue is expected to be in the range of $17.0bn-$17.3bn,-2%
• NAFTA- Lower volumes on channel inventory management and strategic product exits; price declines led by competitive pressure. YoY (earlier guidance of $17.9-$18.2bn +3% YoY), primarily led
• LATAM- Volume decline led by elevated channel inventory and shift in timing of farmers purchase by lower CP volumes in NAFTA and LATAM region.
• EMEA- Lower volumes driven by seasonal demand shift into first half; strong price execution driven by new products • EBITDA is expected to be in the range of $3.25bn-$3.45bn +4%
Corteva • APAC- Pricing gains driven by differentiated technology; currency headwinds driven by Indian rupee and Australian dollar YoY (earlier guidance of $3.5-$3.65bn +11% YoY.) due to superior
• Biologicals continued to perform well and have contributed around $22mn to EBITDA during 1HCY23. performance in the seeds business.
• Pricing gains in EMEA offset by declines in North America and Latin America, driven by competitive pressure • EBITDA margins to be up +100bps YoY (earlier +130bps YoY).
• Demand at farmer's level continue to be healthy with LATAM market showing improvement from 2HCY23. Crop Protection market • Free cash flow to be in the range of earlier $ 0.6-1.0bn (earlier
is expected to grow at low single digits during CY23. guidance of $1.0-$1.2bn).
Herbicides business witnessed significant decline in sales led by lower volumes and prices for glyphosate-based products in particular. Overall, decrease
in volumes was driven by destocking and unfavorable weather conditions. • Revenue de-growth of 5% YoY (Vs +3% YoY guided earlier);
Corn Seed & Traits rose significantly led by price increase in all regions Expects glyphosate based herbicides sales to decline by 30-35%
Bayer AG (Germany) Fungicides was up considerably, mainly due to higher volumes in Latin America YoY (Earlier guided to decline by 15-20% YoY)
Insecticides increased especially in Europe/Middle East/Africa due to higher prices and volumes. However, revenues declined in Brazil was largely led by • EBITDA margins guided at 21% (earlier in the range of 25-26%).
lower prices. • EBITDA margins guided at 21% (earlier in the range of 25-26%).
Herbicides recorded substantial price declines (glyphosate-based products). Higher volumes in all regions were insufficient to offset this effect.
Revenue is expected to be at Yen610bn; up 2% YoY (Price/Vol/FX of

• Demand for methionine remained mute during the quarter and prices have dropped significantly. -4%/+9%/-3%).
• Company indicated that higher inventories in LATAM market has resulted into significant drop in shipments.
Sumitomo Chemicals EBITDA at Yen62bn; up 8% YoY (Price/Vol/FX of -40%/-
• Extreme weather conditions coupled with higher channel inventories has impacted sales in the Asian market. 3%/+51%).
EBITDA margins to be at 10.2% up+60bps YoY.
Source: Company; Anand Rathi Research 4

Improving farm economics
Government thrust on doubling farmers’ incomes augurs well for agronomics Budgetary allocation in the increasing trend augurs well for the sector
▪ Contribution of agriculture to GVA is above 20%, the highest in the last decade
▪ Incessant focus of government on agriculture through higher budgetary allocations under Particulars (Rs bn)
Revised Actual Budget Revised Budget
various schemes like crop insurance, interest subsidy, PK-Kisan, PMKSY, etc. augurs well 2020-21 2021-22 2022-23 2022-23 2023-24
for overall farm economics Crop Insurance Scheme 153 135 155 124 136
▪ The focus on doubling farmers’ incomes through raising crop MSPs supports the overall
argument (MSPs up 35% in the last five years) Interest subsidy for short-term credit to farmers 198 215 - - -
▪ With stagnant arable land and rising population, increasing yields through agrochemicals Market intervention scheme, price support
10 - 195 220 230
is the way ahead scheme
Stagnant land; increasing yields through better agri-inputs is the way ahead Pradhan Mantri Annadaata ani Sanrakshan
3 - - - -
Foodgrains Yojna
Year PM-Kisan 650 668 680 600 600
Area (m ha) Production (m tonnes) Yield (kg/ha)
1990-91 127.8 176.4 1,380 PMKSY 26 18 - - -
1995-96 121.0 180.4 1,491 National Food Security Mission 19 10 - - -
2000-01 121.1 196.8 1,626
2005-06 121.6 208.6 1,714 (%)
Agriculture comprises 19% of GVA
2010-11 126.7 244.5 1,930 100
2011-12 124.8 259.3 2,078
80
49.0
50.0
2012-13 120.8 257.1 2,129
50.6
51.8
52.3
52.5
52.5
52.6
53.4
54.3
55.0
2013-14 125.0 265.0 2,120 60
2014-15 124.3 252.0 2,028
40
2011-12 18.5 32.5
2012-13 18.2 31.8
2013-14 18.6 30.8
2021-22 19.0 28.5

2014-15 18.2 30.0
2015-16 122.7 252.2 2,056
2020-21 20.2 25.6

2017-18 18.3 29.2
2015-16 17.7 30.0
2016-17 18.0 29.3
2018-19 17.6 29.0
2019-20 18.4 26.7

2016-17 129.2 275.1 2,129 20
2017-18 127.6 284.8 2,233
0
2018-19 124.2 283.4 2,281
2019-20 127.6 296.7 2,325
2020-21 129.8 310.7 2,394
Agriculture, Forestry & Fishing Industry Services
2021-22 130.5 315.7 2,419
5
Source: GOI; Anand Rathi Research
Improving farm economics (cont.)
Wider irrigated area >> enhanced agri-input usage >> better yield 52% of India’s agricultural land is under irrigation
(%)
▪ Irrigated land is currently 52% of net sown area and increasing, boosted by 120.0
enhanced awareness /spending by government on efficient use of water 99.1 93.1
through sprinkler and drip irrigation (per drop, more crop) 100.0
80.9
▪ We believe more irrigated area augurs well for the agriculture sector overall, 80.0 70.6
61.5 59.4 58.7
aided by a) more intense cropping; b) greater consumption of agri inputs; c) 60.0 54.1 53.7 52.2
higher yields; d) reduced dependence on rainfall 40.0 33.0
22.4 18.7
▪ Yields for major crops such as rice, wheat and maize have been trending 20.0
northward
-
▪ Remunerative commodity prices in the domestic market support the entire
Karnataka
UP
AP
Tamil Nadu
All India
Rajasthan
Bihar
Haryana
Punjab
MP
Telangana
West Bengal
Maharashtra
argument
(%) Crop yields have been improving consistently over the years (qtl/ha) Foodgrains and oilseed yield trends over the years (qtl/ha)
40 (%)
30
35 35.1
29.9 32.0 25 24.2
30 30.3
28.1 20 19.3 20.4
25 25.4 25.6
24.0 15
22.4 11.9 12.9
20 10 9.7
15 5
2017
2011
2012
2013
2014
2015
2016
2018
2019
2020
2021
2022
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Rice Maize Wheat
Source: GOI; Anand Rathi Research Total Foodgrains Total oilseeds 6
Prices of major crops continue to be above MSPs
Paddy prices 6% above MSP and up 15% y/y Wheat prices 13% above MSP and up 2% y/y
2,500 40.0% 4,000 40.0%
30.0% 3,500 30.0%
2,000 3,000
20.0% 20.0%
1,500 2,500
10.0% 10.0%
2,000
1,000 0.0% 0.0%
1,500
-10.0% 1,000 -10.0%
500
-20.0% 500 -20.0%
0 -30.0% 0 -30.0%
Oct-16
Oct-23
Oct-16
Oct-23
Jul-18
Jul-18
Apr-13
Nov-13
Dec-17
Apr-20
Apr-13
Jun-14
Jan-15
Aug-15
Nov-20
Nov-13
Apr-20
Mar-16
May-17
Feb-19
Sep-19
Jun-21
Jan-22
Aug-22
Mar-23
Jun-14
Jan-15
Aug-15
Dec-17
Nov-20
Mar-16
May-17
Feb-19
Sep-19
Jun-21
Jan-22
Aug-22
Mar-23
Paddy YoY gr. (RHS) Wheat YoY gr. (RHS)
Maize prices 21% above MSP and up 16% y/y Cotton prices 2% above MSP; however is down 15% y/y
3,500 80.0% 12,000 120.0%
3,000 60.0% 100.0%
10,000
80.0%
2,500 40.0% 8,000 60.0%
2,000 20.0% 40.0%
6,000
1,500 0.0% 20.0%
4,000 0.0%
1,000 -20.0% -20.0%
500 -40.0% 2,000
-40.0%
0 -60.0% 0 -60.0%
Jul-18
Apr-13
Nov-13
Jun-14
Jan-15
Aug-15
Dec-17
Apr-20
Nov-20
Mar-16
May-17
Jun-21
Jan-22
Aug-22
Feb-19
Sep-19
Mar-23
Oct-16
Oct-23
Nov-13
Aug-15
Nov-20
Aug-22
Jul-18
Apr-13
Dec-17
Apr-20
Jun-14
Jan-15
Mar-16
May-17
Jun-21
Jan-22
Feb-19
Sep-19
Mar-23
Oct-16
Oct-23
Maize YoY gr. (RHS) Cotton YoY gr. (RHS)

Source: Agmarknet, Anand Rathi Research 7
Average increase in MSPs of crops has been 22% over the last five years
CAGR 13-24
Commodity (Rs/qtl) 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
(%)
Kharif crops
Paddy common 1,250 1,310 1,360 1,410 1,470 1,550 1,750 1,815 1,868 1,940 2,040 2,183 5.2
Paddy (F) / Grade 'A' 1,280 1,345 1,400 1,450 1,510 1,590 1,770 1,835 1,888 1,960 2,060 2,203 5.1
Jowar hybrid 1,500 1,500 1,530 1,570 1,625 1,700 2,430 2,550 2,620 2,738 2,970 3,180 7.1
Jowar Maldandi 1,520 1,520 1,550 1,590 1,650 1,725 2,450 2,570 2,640 2,758 2,990 3,225 7.1
Bajra 1,175 1,250 1,250 1,275 1,330 1,425 1,950 2,000 2,150 2,250 2,350 2,500 7.1
Maize 1,175 1,310 1,310 1,325 1,365 1,425 1,700 1,760 1,850 1,870 1,962 2,090 5.4
Ragi 1,500 1,500 1,550 1,650 1,725 1,900 2,897 3,150 3,295 3,377 3,578 3,846 8.9
Tur (Arhar) 3,850 4,300 4,350 4,625 5,050 5,450 5,675 5,800 6,000 6,300 6,600 7,000 5.6
Moong 4,400 4,500 4,600 4,850 5,225 5,575 6,975 7,050 7,196 7,275 7,755 8,558 6.2
Urad 4,300 4,300 4,350 4,625 5,000 5,400 5,600 5,700 6,000 6,300 6,600 6,950 4.5
Groundnut 3,700 4,000 4,000 4,030 4,220 4,450 4,890 5,090 5,275 5,550 5,850 6,377 5.1
Sunflower seed 3,700 3,700 3,750 3,800 3,950 4,100 5,388 5,650 5,885 6,015 6,400 6,760 5.6
Soyabean Black 2,200 2,500 2,500 - - - - - - - - -
Soyabean Yellow 2,240 2,560 2,560 2,600 2,775 3,050 3,399 3,710 3,880 3,950 4,300 4,600 6.8
Sesamum 4,200 4,500 4,600 4,700 5,000 5,300 6,249 6,485 6,855 7,307 7,830 8,635 6.8
Niger seed 3,500 3,500 3,600 3,650 3,825 4,050 5,877 5,940 6,695 6,930 7,287 7,734 7.5
Medium-staple cotton 3,600 3,700 3,750 3,800 3,860 4,020 5,150 5,255 5,515 5,726 6,080 6,620 5.7
Long-staple cotton 3,900 4,000 4,050 4,100 4,160 4,320 5,450 5,550 5,825 6,025 6,380 7,020 5.5
Rabi crops
Wheat 1,350 1,400 1,450 1,525 1,625 1,735 1,840 1,925 1,975 2,015 2,125 2,275 4.9
Barley 980 1,100 1,150 1,225 1,325 1,410 1,440 1,525 1,600 1,635 1,735 1,850 5.9
Gram 3,000 3,100 3,175 3,500 4,000 4,400 4,620 4,875 5,100 5,230 5,335 5,440 5.6
Lentil (masur) 2,900 2,950 3,075 3,400 3,950 4,250 4,475 4,800 5,100 5,500 6,000 6,425 7.5
Rapeseed / mustard 3,000 3,050 3,100 3,350 3,700 4,000 4,200 4,425 4,650 5,050 5,450 5,650 5.9
Safflower 2,800 3,000 3,050 3,300 3,700 4,100 4,945 5,215 5,327 5,441 5,650 5,800 6.8
Commercial crops
Jute 2,200 2,300 2,400 2,700 3,200 3,500 3,700 3,950 4,225 4,500 4,750 5,050 7.8
Sugarcane 170 210 220 230 230 255 275 275 285 290 305 315 5.8
Copra (milling) 5,250 5,250 5,250 5,550 5,950 6,500 7,511 9,521 9,960 10,335 10,590 10,860 6.8
Source:
Copra GOI,
(ball)Anand Rathi Research 5,500 5,500 5,500 5,830 6,240 6,785 7,750 9,920 10,300 10,600 11,000 11,750 7.1 8
Off-patent molecules to fuel growth
Agrochemicals worth ~$6bn are going off-patent by 2030
▪ India is the fourth largest producer of agrochemicals after the U.S., Japan, and China, and has emerged as the 13th largest exporter of pesticides. It is a major hub of
generic pesticide production. The fact that 22 such molecules will be emerging from their patent periods would substantially expand offerings of Indian companies
and help fetch extra revenue
▪ Industry data suggest that ~30-40% of the off-patent molecules are taken up by generic manufactures, while ~60-70% are not adopted by generic manufacturers,
primarily driven by a) limited market and applicability in regions; b) unavailability and lower capability to manufacture the intermediates
What does it mean for the generic manufacturers?

▪ Generic companies especially in developing countries (where they have limited R&D facilities and less balance sheet strength to carry such costs) would be major
beneficiaries of the molecules going off-patent
▪ As there are already addressable markets for these molecules, with greater efficacy to fight pests (better markets and targeted crops), it becomes easy for generics
manufacturers to lever their distribution networks
▪ Generic manufacturers break the exclusivity of molecules/ companies. Hence, that particular product has no pricing advantage, and it becomes easier for farmers to
adopt that product
▪ We believe this augurs well for domestic agrochemicals manufacturers, as it would result in opening up vast opportunities for domestic companies, in both domestic
formulations as well in exports
Source: Company, Anand Rathi Research 9

22 molecules worth $6bn going off-patent by 2030
Market Patent
Sl. No. Molecule Inventor Use
$ m, 2019 expiry
1 Bixafen Bayer Crop Science 276 2023 Broad spectrum fungicide for cereals
2 Chlorantraniliprole Corteva/FMC 1,750 2024 Chewing insects of soybean, F&V, rice, cotton, maize, pome fruit, sugarcane potato, and cereals.
3 Cyantraniliprole Corteva/FMC/Syngenta 120 2026 Effective against the larval stages of lepidopteran insects; and also on thrips, aphids, and some other chewing and sucking insects on a variety of crops.
4 Fenpyrazamine Sumitomo Chemical 11 2022 Highly effective against grey mold, stem rot, and brown rot in fruits and vegetables.
5 Flubendiamide Bayer Crop Science 507 2024 Mainly effective for controlling lepidopteron pests including resistant strain in rice, cotton, corn, grapes, other fruits, and vegetables.
6 Fluopicolide Bayer Crop Science 45 2024 Fungicide for grapes, potatoes, fruits, and vegetables.
7 Fluopyram Bayer Crop Science 87 2024 Used against fungal diseases such as gray mold (Botrytis), powdery mildew, apple scab, Alternaria, Sclerotinia, and Monilinia.
8 Fluxapyroxad BASF SE 491 2022 Broad spectrum fungicide for cereals, soybean, specialty crops, and turf.
Broad spectrum fungicide. Controls a wide range of fungal pathogens including Septoria tritici, Puccinia recondita, and Puccinia striformis on wheat, Pyrenophora
9 Isopyrazam Syngenta AG 129 2023 teres, Rhynchosporium secalis, and Ramularia collocygni on barley, Puccinia recondita on rye, and triticale and Pyrenophora avenae on oats. It also
controls Mycospaerella fijiensis on banana.
10 mandipropamid Syngenta AG 179 2023 Late blight of potato and tomato. Also used in tobacco, F&V, and vine.
Potato: Black Scurf (Rhizoctonia solani), Silver Scurf (Helminthosporium solani), Dry rot (Fusarium spp.).
11 Penflufen Bayer Crop Science 170 2024
Cereals: Root rot (Rhizoctonia spp.), Smut, (Rape, Soybean, Cotton), and a number of seed-borne pathogens.
12 Penthiopyrad Corteva Agriscience 85 2024 It offers unique RootingPower™ that results in stronger, healthier roots for higher crop productivity.
Highly selective systemic herbicide used to control monocotyledonous grass weeds in crops such as wild oats, rye-grass, and black grass in winter and spring
13 Pinoxaden Syngenta AG 421 2026
wheat and winter and spring barley. Controls a broad spectrum of grass weeds in wheat.
14 Pyriofenone Ishihara 5 2024 Fungicide developed for the control of powdery mildew in cereals and grape vines.
15 Pyroxsulam Corteva Agriscience 215 2024 Broad spectrum grass and broadleaf weeds of cereals.
Long-lasting protection against difficult-to-control seed-, soil-, and air-borne pathogens such as: Rhizoctonia spp., Ustilago spp. (on cereals), Tilletia
caries, Urocystis occulta, Pyrenophora graminea, Microdochium nivale, Typhula spp., Sphacelotheca reiliana, Macrophomina, Sclerotium spp. and also some activity
16 Sedaxane Syngenta AG 108 2024
on Verticillium, Phoma, Helminthosporium solani, Phakopsora, Cochliobolus sativus of cereals, soybeans, canola/oilseed rape, corn, potatoes, rice, sugar beets,
cotton, and pulses. It offers unique RootingPower™ that results in stronger, healthier roots for higher crop productivity.
17 Thiencarbazone-methyl Bayer Crop Science 155 2024 Herbicide used for the selective control of grasses and broadleaf weeds primarily in corn.
18 Valifenalate Ishihara 25 2024 Used to control mildew in many crops including grapes, potatoes, and tomatoes.
19 Benzovindiflupyr Syngenta AG 419 2028 Control broad range of fungal diseases-blight, mildew, rust, scab, leafspot on corn, soybean, ornamentals, turf, etc.
20 Sulfoxaflor Corteva Agriscience 190 2027 Sucking pests of turf, soybean, cotton, cereals, and F&V.
21 Saflufenacil BASF 225 2024 Broadleaf weeds of soybean, maize, sugarcane, cereals, non-crop, and orchards.
22 Aminopyralid Corteva Agriscience 160 2021 Broad spectrum weedicide for pasture, rangeland, oil palm, rubber, F&V, and cereals.
Global Agro-
1 chemicals
Global agrochemicals sector
Oligopolistic structure
▪ In the last few years, many global agrochemicals companies have acquired or merged their business operations to counter fluctuating demand, currencies and crop
prices, which had affected their sales and profit margins
▪ Despite several challenges and uncertainties in the past, the global agriculture sector has registered a 7% CAGR over CY01-22, to $79bn while, ahead, it is expected
to grow healthily
▪ With consolidation largely in place, the global agrochemicals and seeds sector is now controlled by four large manufacturers (against six earlier) commanding a lion’s
share of 55-60% in the global agrochemicals market
▪ The oligopolistic structure globally is likely to result in a) superior pricing power; b) concentrated product portfolios; c) revenue and cost synergies arising from wider
distribution networks, cross-selling products and removal of double spending on operational overheads
Global agrochemicals posted a 7% CAGR over CY01-22 (%) Oligopolistic structure controlled by the big four
($ bn)
($ bn) (%) 13.3
100 20.3 21.2 25.0 14.0 11.4
20.0 12.0
14.8 12.7 10.0
80 10.4 15.0 7.7 7.3
8.0 5.9 9.4 8.7 8.0
6.5 4.5 6.0 10.0 5.6 5.0
60 2.8 3.0 2.3 5.1 6.0 4.4 3.5
-0.9 5.0 4.0
40 -3.8 -2.4 1.8 1.8 1.5
-6.8 0.0 2.0
-7.0
20 -9.6 -5.0 -
-10.0
UPL+ Arysta
Syngenta
Adama
Jaingsu Yangnong
BASF
Dow Dupont
FMC
Sumitomo
Nufarm
Bayer + Monsanto
Rainbow Chemical
0 -15.0
CY15
CY01
CY02
CY03
CY04
CY05
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY16
CY17
CY18
CY19
CY20
CY21
CY22
Industry size YoY gr. (%) (RHS)

Source: Industry, Anand Rathi Research 12
Global agrochemicals sector (cont.)
Sharper focus of every nation to secure food security is likely to keep the sector’s outlook bright
▪ We believe that the sector’s long-term prospects of increasing yields is intact propelled by a) growing demand for food; b) shrinking arable land and water and c)
stagnant yields. Ultimately, greater consumption of food drives demand for agri-inputs like seeds, fertilizers, agrochemicals and irrigation
▪ Far better growth is expected from developing nations in APAC, LATAM, Africa and the RoW on account of better resources available and larger investments in agri
technology
▪ Of the overall agrochemicals growth, herbicides is likely to grow much faster than other categories, primarily driven by a) higher agricultural wage rates; b) less
available farm labor; c) changes in farm policies in various emerging economies like LATAM
▪ The global agrochemicals sector can be broadly categorized as innovators and generics players. Per Philips McDougall, the shares of revenue of patented and
generics molecules are 20:80. Innovators are R-D based patented product players, while off-patented product players are termed generics manufacturers
▪ Geographically, Europe, Latin America, Asia, NAFTA and the Middle East/Africa constitute 20%, 28%, 32%, 17% and 3% respectively of the global agrochemicals
market
▪ Category-wise, herbicides, insecticides, fungicides and others constitute 46%, 26%, 25% and 3% respectively of the global agrochemicals market

Global agriculture: Market segment break-up
▪ Geographically, Europe, Latin America, Asia, NAFTA and the Middle East/Africa APAC and LATAM comprise 60% of the global market
constitute 20%, 28%, 32%, 17% and 3% respectively of the global NAFTA
RoW (ME and
agrochemicals market Africa)
17% 3% APAC
▪ Category-wise: herbicides, insecticides, fungicides and others constitute 46%, 32%
26%, 25% and 3% respectively of the global agrochemicals market
▪ The global agrochemicals sector can broadly be categorized as innovators and
generics manufacturers. Per Philips McDougall, the share of revenues of patented
and generics molecules are 20:80. Europe
20%
Latin America
28%
Herbicides continue to dominate global markets Off-patent molecules comprise are 80% of global markets Generics manufacturers cover 75% of global markets
Others
Patented
3% Innovators
20%
Fungicide 25%
25%
Herbicide
46%
Insecticide Off patented Generic Players

26% 80% 75%
Global agriculture: Top-selling molecules
Top-selling herbicides globally ($ m) Top-selling insecticides globally ($ m)
($ m) ($ m)
1,140
5,000 4,575 1,200 1,030
1,000 915
4,000 800 645 625
600 530 510
3,000 360 340 305 290 265
400 260 230 230
2,000 200
1,000 685 640 620 605 560 480 420 0
360 345 290 290 285 270 265
Imidacloprid
Acephate
Carbofuran
Thiamethoxam
Fipronil
Chlorantraniliprole
Abamectin
Chloropyrifos
Flubendiamide
Spinosad
Clothianidin
Cypermethrin
Bifenthrin
Deltamethrin
Lambda- Cyhalothrin
0
2,4-D
Fenoxaprop
Picloram
Mesosulfuron
Metolachlor
Glyphosate
Mesotrione
Atrazine
Nicosulfuron
Clomazone
Pinoxaden
Paraquat
Glufosinate
Pendimethalin
Acetochlor
Top-selling fungicides globally ($ m) Global crop protection market segmentation by crop type, %
($ m)
Others Cereals
1,400 1,260 17% 16%
1,200
1,000 800
800 630 625 615 535
600 500 495
365 355 350 345 320 280 Corn
400 260
200 11%
0
Boscalid
Azoxystrobin
Prothioconazole
Fludioxonil
Pyraclostrobin
Trifloxystrobin
Metalaxyl
Chlorothalonil
Horticulture
Mancozeb
Difenoconazole
Copper Fungicides
Tebuconazole
Epoxiconazole
Cyproconazole
Propiconazole
25% Rice
11%
Cotton Soybean
Source: Industry, Anand Rathi Research 5% 15% 15
Global bio-pesticides: Evolving growth driver
▪ The increase in demand for sustainable agricultural practices, integrated pest management, organic farming and the growing need to curb post-harvest losses have
encouraged development of agricultural biologicals
▪ The global bio-pesticides market is projected to record a 14.7% CAGR from $5.3bn in CY22 to $8.7bn by CY25. With rising concerns about health and environmental
degradation, the use of bio-pesticides is rising
▪ Bio-insecticides is likely to lead the bio-pesticides segment, the greatest use coming from horticulture (fruit and vegetables)
Key drivers
▪ Mounting demand for organic food and organic agriculture across the globe would be the key demand driver for the global bio-pesticide market. As consumers are
increasingly becoming aware of chemicals used in food production and the potential hazards of chemical residues on food, they are supporting chemical-free
production alternatives, pushing growers to organic farming, thereby, driving demand for bio-pesticides
▪ The high costs associated with developing synthetic crop-protection products require extensive R&D activity and go through regulatory approvals as opposed to bio-
pesticides, which are less expensive and have quick development processes. Hence, due to its cost-effectiveness, smaller companies/start-ups are venturing into this
market with limited research budgets. This in turn has resulted in keen competition for major agricultural biologicals manufacturers
Limitations
▪ Biological products have a short or limited shelf life and a high probability of contamination
Key manufacturers globally

▪ Major bio-pesticide manufacturers include Bayer Crop Science AG, Marrone Bio Innovation, Certis USA, Dow Chemicals, Isagro SPA, Camson Bio-technologies, Andermatt
Biocontrol AG, and BASF Corporation
16
Domestic
2 Agro-chemicals
Domestic agrochemical industry
Long-term growth story intact
▪ The share of agriculture in India’s GDP was ~20% in FY21 (Rs446bn, the highest in the last 17 years)
▪ The domestic agrochemicals sector has been going through structural changes, driven by a) rising domestic demand; b) tighter supplies from China; c) substantial
opportunities to explore products going off-patent; and d) strategic partnerships with global giants
▪ With >50% of the population dependent on farming and their constrained income growth in the last few years, the government’s thrust on doubling farmers’ incomes
through higher MSPs for crops, increased irrigation coverage, better procurement and higher agricultural credit augur well for the sector
▪ India is the fourth largest producer of agrochemicals after the USA, Japan and China. Its agrochemicals sector has recorded a 9% CAGR over 2015-20 and is now worth
$4.2bn, revenues coming equally from exports and domestically
▪ Export revenue is estimated to come at an expedited rate by 2024, likely 55% of total revenues, to $5.7bn
▪ With rising labor costs globally; we expect India would follow the global trend of greater herbicide consumption in the medium to longer term
India’s pesticide consumption largely skewed toward insecticides (%) Herbicides dominate global agrochemicals (%)
120% 120%
100% 3% 4% 4% 100% 3% 3% 2%
80% 23% 24% 28% 80%
52% 49% 48%
60% 18% 19% 19% 60%
40% 40% 24%
56% 23% 24%
53% 49%
20% 20%
22% 24% 26%
0% 0%
2024e
2014
2019
2024e
2014
2019
Insecticides Fungicides Herbicides Others Insecticides Fungicides Herbicides Others
Per-capita consumption much below global averages
▪ In terms of cropped area, India is the leading producer of rice, wheat and cotton. The area treated with agro-chemicals, however, is much lower than global averages
(~35-40%)
▪ India’s share in global agricultural output is 12%, but India’s share in global pesticide use is just around 1%
▪ While domestic consumption of agro-chemicals, at ~0.58 kg/hectare, is substantially below global standards
▪ The top-five states (AP, Punjab, MH, Karnataka, Gujarat) consume >60% of total agrochemicals in India
▪ Paddy and cotton are the major crops on which agro-chemicals are used (>60% of total agrochemicals used)
Per-capita consumption of agrochemicals much below global averages (kg/hectare) Country-wise – value of agri-output, pesticide use and AI registrations
18.0 17.0 Value of agri output Pesticide use
Country No. of AIs registered
16.0 ($ bn) (tonnes)
14.0 13.0
12.0 China 968 1,763,000 681
12.0
India 401 50,410 279
10.0
8.0 7.0 7.0 EU 239 368,588 489
6.0 5.0 5.0 USA 193 407,779 323
4.0 Brazil 94 377,176 477
2.0 0.5 Japan 57 51,006 583
-
Australia 36 50,922 561
Japan
UK
Korea
India
China
Taiwan
USA
France
World 3,342 4,116,832 NA

Sector largely skewed toward insecticides
Category-wise consumption of pesticides over the years (tonnes) Demand for indigenous pesticides over the years (tonnes)
(mt) (mt)
14,000 14,000
12,000 12,000
10,000 10,000
8,000 8,000
6,000 6,000
4,000 4,000
2,000 2,000
- -
Fungicide
Bio-Pesticide
Insecticide
Herbicides
Others
Others
Fungicide
Insecticide
Herbicides
FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Top-five states, >60% consumption Paddy and cotton dominate the domestic insecticides market
Others Andhra Pradesh
20% 23%
Paddy
Others 35%
Tamilnadu and
Kerala 40%
6%
Haryana Punjab
7% 12%
West Bengal
6%
Gujarat Maharashtra
Karnataka 12% Cotton
Source: Industry, Anand Rathi Research 7% 7% 20
25%
Domestic agrochemicals: consumption trend by category
Most consumed insecticide in India in FY23 (tonnes) Most consumed fungicide in India in FY23 (tonnes)
(mt) (mt)
1,600 1,399 4,500 4,245
1,400 4,000
1,200 3,500
1,000 803 3,000 2,201
800 569 530 491 2,500
600 428 406 366 335 329 320 2,000
400 301 1,500
174 165 156 141 115 111 79 1,000 661 611 588 528
200 320 250 233 202 138 113 105 83 66
- 500
Cartap…
Emamection…
-
Copper…
Carbendazim+…
Thiophanate-…
Chlorantraniliprole
Thiamethoxam
Malathion
Acephate
Lamda-cyhalothrin
Fenvalerate
Carbofuran
Indoxacarb
Fipronil
Quinalphos
Dimethoate
Acetamiprid
Chlorpyriphos
Imidachloprid
Cypermethrin
Profenophos
Monocrotophos
Ziram
Thiram
Sulphur
Carbendazim
Propineb
Zineb
Dodine
Mancozeb
Captan
Hexaconazole
Propiconazole
Tebuconazole
Most consumed herbicide in India in FY23 (tonnes) Most consumed rodenticide in India in FY23 (tonnes)
(mt) (mt)
1,200 959 160 129 136
1,000 140
800 697 120
580 100 87
600 80
400 336 329 60
194 131 40 23 18
200 99 77
20 3
- -
2,4-D Amine Salt
Dichloride
Atrazine
Pretilachlor
Glyphosate
Butachlor
Metribuzin
Pendimethalin
Imazethatyr
Zinc Phosphide
Aluminium
Methyl bromide
Bromadiolone
Barium Carbonate
Ethylene Dibromide
Phosphide
Paraquat

Domestic bio-pesticides market: developing opportunity
Domestic demand trend of bio-pesticides over the years (tonnes) Domestic consumption trend of bio-pesticides over the years (tonnes)
(mt) (mt)
14,000 10,000 9,321
11,988 8,847 8,645
12,000 10,852 11,054 11,211
10,447 10,409 8,000 7,190 7,174 7,203 7,248
9,725
10,000
8,000 6,000
6,000 4,000
4,000
2,000 2,000
- -
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY17
FY18
FY19
FY20
FY21
FY22
FY23
Top-five states, 60% of bio-pesticide demand Top-five states, 55% of bio-pesticide consumption
Madhya Pradesh, Others, 10%
4% Maharashtra, 23% Others, 18% Maharashtra, 13%
Haryana*, 4%
Orissa, 4% West Bengal, 12%
Bihar, 5%
Bihar, 4%
Chhattisgarh, 6%
Haryana*, 5%
West Bengal, 12% Rajasthan, 11%
Tamil Nadu, 6%
Karnataka, 7%
Karnataka, 6% Kerala, 9% Chhattisgarh, 7% Tamil Nadu, 10%
Rajasthan, 9% Kerala, 9%
Competitive positioning of domestic agrochemicals companies
Business model of agrochemicals companies and revenue (%) from various segments Market shares of domestic agrochemicals companies
Agro-chemicals/ Agri-inputs Other segments Coromandel Others, 2% Dhanuka Agritech,
Domestic Exports International, 6% 7%
Company / Segments Rallis India, 7%
Technical Brand-named In-licensing tie- Syngenta India,
mfg. formulations ups CRAMS Exports 10%
Bayer Crop Science 88 7 Seeds - 5 Insecticide India,
Dhanuka Agritech 52 48 4% Bayer Cropscience,
17%
Insecticides India 63-68 15-20
BASF, 7%
PI Industries 39 61
Rallis India 56 27 Seeds - 16
Sharda Cropchem 88 Belts - 12
UPL 18 82 Sumitomo
Coromandel Int'l 51 49 Chemicals, 10%
UPL, 26% PI, 6%
Competitive positioning of domestic companies
Categories Bayer Crop Science Sumitomo Chemical Rallis India Dhanuka Agritech PI Industries UPL Ltd Insecticides India Sharda Cropchem
Business Model Innovator Innovator Inlicensing & Generics Inlicensing & Distribution CSM & Inlicensing Generic Giant Inlicensing & Generics Generics Registration
Brand Value/Recall        
Pricing        
Distribution Network        
Product Mix        
New Product launches        

Our View
We cover four companies in this report, recommending Buys on Bayer Crop Science, Dhanuka Agritech, Sumitomo Chemicals and UPL.
Top Pick
Sumitomo Chemical: We prefer Sumitomo Chemicals (India) in agrochemicals, as we believe worst in terms of volume growth and pricing pressure
is largely behind and expect gradual recovery as higher stocks piled up globally have started to normalise (barring the US). Price drops in the last
few months seem to have been arrested for now. Hence, we believe a gradual recovery in revenue growth and margins cannot be ruled out.
Further, the company is poised to post 4%/7% revenue/PAT CAGRs over FY23-26 (FY18-23: 13%/28%). The company had a healthy 28% RoE, 23%
pre-tax RoCE and net cash balance sheet in FY23. We initiate coverage on Sumitomo Chemicals with a Buy at a TP of Rs.490, 40x FY26e EPS.
Current slowdown not as bad as the last one

Domestic agrochemicals companies (those we cover) clocked an 8.7% revenue CAGR over FY14-16 as two consecutive years of below-normal rains (FY15 and FY16) coupled
with greater channel stocks and pressure on farm incomes curbed sales. Cash-flows were strained, and the below-normal monsoons led to industry-wide price cuts and
subdued volumes. We believe that the pressure this time will not be as severe as the last slowdown (FY15/16) given a) on-ground demand is still strong unlike during the
last slowdown when farmers down-traded to less expensive products driven by pressure on farm output prices; b) green-shoots visible in terms of modest channel stocks
across regions (barring the US); c) crop prices—domestic and global—continue to be remunerative; d) the government’s thrust on improving farm income; e) expectations
of special aid from the government to the farming community in case of crop damage or losses (due to adverse weather, etc.) given Lok Sabha elections next year.

Recommendation synopsis
Sumitomo Chemicals, India – Near term hiccups; long-term intact; Buy
Strong parental advantage to support growth. Strong parental support from Sumitomo Chemical Corporation (SCC) gives its Indian subsidiary unique advantages
such as a) access to SCC’s portfolio; b) technical and R&D expertise to develop proprietary products and c) financial strength and a wider market reach.
To be the ‘go to guy’ for SCC’s generic exports globally. The Indian arm is the only technical and generic grade manufacturing site of the SCC group outside Japan.
It intends to enhance exports by levering SCC's global supply chain and marketing network (received approvals for five molecules). We expect its export revenue to record a
35% CAGR over FY24-FY26 (FY20-FY23: 23%) on the back of SCC's intent to maximise synergies from the integration of Nufarm's distribution business in LATAM and
Sumitomo India's exports.
Outlook and Valuation. Considering the above, the company is poised to post 4%/7% revenue/ PAT CAGRs over FY23-26 (FY18-23: 13%/28%). Further, the company
had a healthy 23% RoE, a 30% pre-tax RoCE and a net-cash balance-sheet in FY23. We initiate coverage with a Buy at a TP of Rs.500, 40x FY26e EPS
Bayer Crop Science – Market dominance likely to endure; Buy

Market dominance in domestic agrochemicals. Strong brand recall and superior products have helped Bayer Crop Science dominate domestic agrochemicals with a
~17% market share (in FY23), and a ~40-45% market share in rice hybrids.
Product launches to propel growth. The company is on track to launch several innovative products from the parent in the next few years (it launched 25 products over
FY15-FY24 ytd). This in turn would support overall growth ahead. The company has registered three products in FY23 and FY24 ytd, likely to reap benefits in future
Outlook and Valuation. The better product mix (greater contribution of maize hybrids in overall revenue) has in turn resulted in the company’s decent margin
improvement in H1 FY24 despite the uncertain crop protection environment. Ahead, we believe dominance in domestic crop protection and the greater contribution from
maize hybrids would support earnings. The company is likely to post 10%/13% revenue/PAT CAGRs over FY23-FY26. The earnings growth trajectory is robust, with debt-
free balance sheets and strong cash-flows. We initiate coverage on the company with a Buy at a TP of Rs6,500, 30x FY26e EPS
25
Recommendation Synopsis
Dhanuka Agritech – Making a foray into technical manufacturing to aid sustainable growth; Buy
Asset-light business model with an extensive distribution network. Dhanuka Agritech has a unique asset-light business model (three formulations facilities; focusing on new
products, supported by tie-ups with global giants) reinforced by an extensive marketing network (6,500 dealers/distributors, 80,000 retailers), giving it an edge over competitors
Foray into technical manufacturing to aid sustainable growth: The company’ made a foray into technical manufacturing at Rs3bn capex (to be spent over FY22-24; funded
through internal accruals) at Dahej, Gujarat (with Rs1.5bn-2bn revenue potential in FY24 and Rs3bn from FY25). Phase-1 of the formulations unit has already gone commercial from
Aug’23 (with one molecule currently; potential to manufacture 4-5 molecules at this MPP), while the technical unit will go commercial by FY24. It will largely take care, through
backward integration, of generics required
Outlook and Valuation. We believe the successful execution and ramp-up of the Dahej project would set the company on the next leg of growth, which would lead to re-rating the
stock over the longer term. The company has a good distribution-led business model with robust RoE (>23%) and balance sheet. We expect it to register 13%/ 13% revenue/PAT
CAGRs over FY23-FY26, boosted by the healthy demand context and product launches. We initiate coverage on the company with a Buy at a TP of Rs.1,200, 16x FY26e EPS
UPL – Challenges subsiding; Buy

LATAM is the key region for UPL (~40% of revenue). Brazil is the fastest growing region for UPL (FY23e ~$1.5bn revenue; ranked fourth-largest in Brazil). It brings >50%
to LATAM revenues and is expected to grow twice that of the industry over next few years on its strong product pipeline and widening distribution reach
Margins expected to recover from H2 FY24. We expect a gradual recovery in margins from H2 FY24 (now showing early signs), as the drop in finished goods prices (in line
with the fall in RM prices) seems to be arrested. This, liquidation of high-cost stocks and stable RM costs are likely to result in margin expansion in H2. UPL generates ~60% of its
annual revenue/ profitability in the second half of the year, with the last quarter bringing ~30%. Thus, we expect a strong margin expansion in Q4 to be aided by a) greater
operating leverage and b) low base
Outlook and Valuation. We anticipate the better performance in H2 FY24, particularly in Q4, to be driven by the improved demand context across markets (barring NAFTA),
supported by higher commodity prices. We expect UPL to clock 3%/12% revenue/PAT CAGRs over FY23-26. We initiate coverage on the company with a Buy at a TP of Rs.690, 10x
FY26e EPS
26
Valuation Snapshot
Revenue EBITDA Adjusted PAT
M Cap Target CAGR CAGR CAGR
Company CMP (Rs) TP (Rs)
(Rs mn) Rating Multiple FY23 FY24e FY25e FY26e FY22- FY23 FY24e FY25e FY26e FY22- FY23 FY24e FY25e FY26e FY22-
(x) 26(%) 26(%) 26(%)
BYRCS 5,492 6,500 246,591 BUY 30x 51,397 56,023 61,625 67,788 10.0 9,242 11,036 12,017 13,422 10.3 6,752 8,087 8,788 9,796 10.1
DAGRI 1,018 1,200 46,399 BUY 16x 17,002 19,202 21,623 24,286 12.5 2,787 3,495 4,022 4,567 14.3 2,335 2,727 3,022 3,403 11.7
SUMICHEM 410 500 204,650 BUY 40x 35,110 28,969 34,926 39,987 17.5 6,666 4,635 6,566 7,917 30.7 5,022 3,574 5,113 6,179 31.5
UPL 590 700 442,500 BUY 10x 535,760 506,762 542,529 589,866 7.9 111,600 101,298 121,186 136,720 16.2 37,094 24,979 41,440 51,542 43.6
Adjusted EPS (Rs) Net Debt (INR Mn) Net debt/Equity (x) RoE(%) RoCE (%)
Company
FY23 FY24e FY25e FY26e FY23 FY24e FY25e FY26e FY23 FY24e FY25e FY26e FY23 FY24e FY25e FY26e FY23 FY24e FY25e FY26e
BYRCS 150.4 180.1 195.7 218.2 (9,091) (14,559) (19,139) (24,706) (0.3) (0.4) (0.5) (0.6) 25.8 27.1 24.9 23.7 34.8 36.5 33.4 31.7
DAGRI 51.2 59.8 66.3 74.7 (962) (2,355) (4,523) (7,042) (0.1) (0.2) (0.3) (0.4) 23.1 23.1 21.0 19.7 30.1 30.1 28.3 26.5
SUMICHEM 10.1 7.2 10.2 12.4 (5,239) (7,484) (9,831) (13,597) (0.2) (0.3) (0.3) (0.4) 23.3 14.2 17.9 18.5 30.3 19.1 24.0 25.2
UPL 49.5 33.3 55.3 68.7 198,420 164,667 134,019 96,266 0.7 0.6 0.4 0.3 15.3 9.1 13.9 15.5 14.3 12.1 16.0 18.2
PE(x) Price/Book Value (x) EV/EBITDA (x)

Company
FY23 FY24e FY25e FY26e FY23 FY24e FY25e FY26e FY23 FY24e FY25e FY26e
BYRCS 36.5 30.5 28.1 25.2 9.1 7.6 6.5 5.5 19.4 15.7 14.1 12.2
DAGRI 19.9 17.0 15.4 13.6 4.4 4.4 4.4 4.4 18.2 17.6 13.6 11.3
SUMICHEM 40.7 57.3 40.0 33.1 8.6 7.7 6.7 5.7 29.9 42.5 29.7 24.1
UPL 12.4 18.3 11.1 8.9 1.7 1.6 1.5 1.3 6.0 6.2 5.0 4.1

3 Companies
Agrochemicals
Initiating coverage
Rating: Buy
Target Price: Rs.6,500
Current market price: Rs.5,502
Key data BYRCS IN

Bayer Crop Science (BYRCS) 52-week high / low
Sensex / Nifty
Rs5625 / 3920
72240 / 21,731
Market dominance likely to persist 3-m average volume $1.4m
Market cap Rs245bn / $2948.8m
Shares outstanding 45m
Shareholding (%) Sep'23 Jun'23 Mar'23

Promoters 71.4 71.4 71.4
- of which, Pledged 0.0 0.0 0.0
Free float 28.6 28.6 28.6
- Foreign institutions 3.3 3.2 3.2
- Domestic institution 13.2 13.1 12.7
- Public 12.1 12.3 12.6
BYRCS - Investment Summary
Summary Bayer Crop Science has highest brand re-call and most extensive distribution network in India (~80,000 distributors),
giving it a distinct edge over other manufacturers. We believe its long-term growth prospects are intact on its merger with
Monsanto India, primarily led by (a) paired products; (b) innovative products from the parent and (c) leading position in
maize and hybrid paddy seeds
Superior products and strong brand recall have helped the company dominate the domestic agrochemicals market (a
Dominates domestic ~17% market share in FY23, and ~40-45% in rice hybrids
agrochemicals
The company is on track to launch several innovative products from the parent in the next few years (it launched 25
Launches to propel products over FY15-FY24 ytd). This in turn would support overall growth ahead. The company has registered three
growth products in FY23 and FY24 ytd, likely to reap benefits in future
The superior product mix (greater contribution of maize hybrids in revenue overall) has in turn resulted in decent margin
Favorable risk- betterment in H1 FY24 despite the uncertain environment in crop protection. Ahead, we believe its dominance in
reward domestic crop protection and the greater contribution from maize hybrids would support earnings. The company is likely
to post 10%/13% revenue/PAT CAGRs over FY23-FY26. It has a robust earnings growth trajectory, debt-free balance
sheet and strong cash-flows. We initiate coverage on the stock with a Buy at a TP of Rs.6,500, 30x FY26e EPS 30
BYRCS - Investment summary
Valuation The superior product mix (greater contribution of maize hybrids in overall revenue) has in turn resulted in decent margin improvement
in H1 FY24 despite the uncertain environment in the crop protection business. Ahead, we believe its dominance in domestic crop
protection and the greater contribution from maize hybrids would support earnings. The company is likely to post 10%/13%
revenue/PAT CAGRs over FY23-FY26. It has a robust earnings growth trajectory, debt-free balance sheet and strong cash-flows. We
initiate coverage on the company with a Buy at a TP of Rs.6,500, 30x FY26e EPS.
Key risks 1) Poorer-than-expected monsoons

2) Ban on glyphosate (~14-15% of FY23 revenue)
Financial Summary Y/E Mar FY22 FY23 FY24e FY25e FY26e

Sales (Rsm) 47,344 51,397 56,023 61,625 67,788
Net profit (Rsm) 6,453 7,582 8,087 8,788 9,796
EPS (Rs) 133.3 150.4 180.1 195.7 218.2
PE (x) 39.2 34.8 29.0 26.7 24.0
EVEBITDA (x) 27.9 24.4 19.9 17.9 15.6
PBV (x) 9.3 8.7 7.2 6.2 5.3
RoE (%) 23.6 25.8 27.1 24.9 23.7
RoCE (%) 22.7 24.7 26.1 24.1 23.0
Dividend yield (%) 0.7 0.6 1.0 1.1 1.1
Net debt/equity (x) -0.3 -0.3 -0.5 -0.5 -0.6

BYRCS – Group companies of Bayer AG (Germany) in India
Bayer AG (parent company) - Germany
Bayer Bio-Sciences, India Bayer Crop Science, India Bayer Vapi Pvt. Ltd, India Bayer Pharmaceuticals, India
(not listed) (listed) (not listed) (JV with Zydus Cadilla)
100% subsidiary of Bayer AG; Subsidiary of Bayer AG; Since

100% subsidiary of Bayer AG; 100% subsidiary of Bayer AG; Manufactures technical grade 2011, the pharmaceuticals division
Manufactures seeds with various Markets and distributes crop- molecules and supplies them to in India has been operating as
traits protection chemicals and seeds Bayer Crop Science and Bayer AG Bayer Zydus, a Bayer-Zydus Cadilla
globally joint venture
Bayer Crop Science (the listed entity) is more of a marketing and distribution company. The manufacturing (Bayer Vapi Pvt. Ltd) and seeds (Bayer Bio Sciences) businesses are 100% subsidiaries of Bayer AG, the parent
company of Bayer Crop Science.

BYRCS - Story in charts
Strong performance in CP offset by declining exports (Rs m) Margins in improving trend, aided by better corn seed sales (%)
(Rsm) (%)
60,000 50 47.5 47.1 45.2 45.4 45.5 45.8
43.1 41.5 42.6 43.7
45 41.1
50,000
40 35.2
40,000 35
30
30,000
25 20.1 19.0 18.0 19.7 19.5 19.8
20,000 20 16.1 15.1 15.3 15.2 17.1
13.8
15
10,000
10
FY24e
FY25e
FY26e
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
0
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
Gross Margins(%) EBITDA Margins (%)
Domestic Agrochemicals Seeds Exports
16 product registrations received (FY21-FY24 ytd)
Technical Name Registration Section Remarks
Launched more than 25 products over FY17-FY24 ytd Fipronil Technical 90% w/w min 9(4) Technical import
(Nos)
Tetraniliprol Technical 90% 9(3) For export only
12 Cyclanilide technical 97% w/w min 9(3) Technical import
10
10 Ethiprole technical 94.5% min 9(3) Indigenous manufacture
FY21
Cyclanilide technical 97% w/w min 9 (3) Technical import
8 7 7 Tetraniliprole technical 89% w/w min 9 (3) Technical import
6
6 5 5 5 5 5 5 Tetraniliprole 18.18% w/w SC 9 (3) Indigenous manufacture
4 4 4 4 4 Pyroxasulfon 85% WG 9 (4) Technical import
4 3 3 3 3 3 3 Thidiazuron technical 98% w/w min 9(3) Technical import
22 2 2 2 2 2 2 Fipronil Technical 95.0% w/w min 9(4) Import
2 1 1 1 1
0 FY22 Imidacloprid 17.1% SL 9(3) Indigenous manufacture
0 Fipronil technical 95.0% w/w min 9(4) Import
Delatmethrin 25% WG 9(3) Import
FY16
FY18
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY17
FY19
FY20
FY21
FY22
FY23
YTDFY24
FY23 Tetraniliprole 40.34% FS 9(3) Indigenous manufacture

Fluopyram 21.37% + Trifloxystrobin 21.37% 9(3) Indigenous manufacture
YTDFY24
Source: Company, Anand Rathi Research Tetraniliprole 10.08% + Thiacloprid 30.25% SC 9(3) Indigenous manufacture 33
BYRCS - Only 60% maize hybridization in India; scope for further improvement
Global maize hybridization trend (%) Bihar and Tamil Nadu have reached 100% maize hybridization (%)
(%) (%)
100 94 120
88 85 100 100
75 100
80 75 72
60 80 66
60 60
39 39
40 40 23
20 20
0
0
Bihar
AP
Tamil Nadu
Rajasthan
Karnataka
Gujarat
MP
Maharashtra
Brazil
USA
Canada
India
Argentina
Maize accounts for 11% of the seed industry (%) Feed industry consumes >60% of maize (%) ▪ The domestic seed industry is estimated at ~Rs190bn, of which
Industrial Exports & maize seeds has an 11% share
Cotton Product- Others
28% Starch 6% ▪ More than two-thirds of the maize produced in India is for feed and
Others 14% other industrial uses. The feed industry in India is registering a 9%
41% CAGR, throwing up huge opportunities for maize producers
Food- Ploutry Feed ▪ The top-seven maize-producing states account for three-fourths of
Processed 47%
maize production in India
7%
Corn
▪ The top-five maize-producing states (Karnataka, AP, MH, Rajasthan
11% and Bihar) account for two-thirds of India’s maize production
Food- Direct
Fruits & Rice Consumption ▪ Only two states (Bihar, TN) have 100% hybridization of maize.
Livestock
Vegetables 6% 13% Feed Hybridization has a direct and positive co-relation with greater
14% 13% yields
BYRCS – Healthy maize acreages + higher price realisations = strong performance
Pick-up in kharif maize acreages in FY22 and FY23 … … followed by higher acreages in rabi FY23
(lakh/hec) (%) ('000 hec) (%)
18.3 16.4
88 15.0 25 15.0 20.0
86 9.5 15.0
10.0 20 9.3
84 10.0
82 3.0 2.9 3.8 3.6
5.0 15 5.0
80 (0.5) (0.3) 0.5
0.0 10 -3.1 0.0
78
(5.1) -9.6 -5.0
76 -5.0 5
74 -10.0
72 -10.0 0 -15.0
2020
2016
2017
2018
2019
2021
2022
2023
2016
2017
2018
2019
2020
2021
2022
Maize acreages- Kharif Growth (%) (RHS) Maize acreages- Rabi Growth (%) (RHS)
Strong maize prices in domestic markets

('000 hec) ▪ ‘Dekalb’- maize hybrids are the company’s top selling product.
3,500 80.0% Currently, maize and rice are the two major crops for the merged
3,000 60.0% entity
2,500 40.0%
2,000 20.0% ▪ The strong performance in its maize hybrids business in FY23 and H1
1,500 0.0% FY24 has resulted in higher margins (the FY23 gross margin up
1,000 -20.0% 150bps y/y)
500 -40.0%
0 -60.0% ▪ We believe that remunerative maize prices in the domestic market (up
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Mar-22
Mar-23
17% y/y in Nov’23) should support growth in the near/medium term

Maize YoY(%)
BYRCS - Financials
Income statement (Rs m) FY22 FY23 FY24e FY25e FY26e Balance sheet (Rs m) FY22 FY23 FY24e FY25e FY26e
Revenues 47,344 51,397 56,023 61,625 67,788 Share capital 449 449 449 449 449
Growth (%) 11.1 8.6 9.0 10.0 10.0 Net worth 25,243 27,121 32,505 38,050 44,602
Raw material 26,642 28,160 30,588 33,586 36,741
Total debt (including Pref) - - - - -
Employee & other expenses 12,591 13,995 14,398 16,023 17,625
Minority interest - - - - -
EBITDA 8,111 9,242 11,036 12,017 13,422
Deferred tax Liability/(Asset) -73 - - - -
EBITDA margins (%) 17.1 18.0 19.7 19.5 19.8
Capital employed 25,170 27,121 32,505 38,050 44,602
- Depreciation 645 795 883 927 1,017
Net tangible assets 5,264 5,431 5,548 5,621 5,605
Other income 546 639 716 689 689
Interest expense 129 223 227 216 205 CWIP (tangible and intangible) 133 29 29 29 29
PBT 8,351 9,693 10,641 11,563 12,889 Investments (Strategic) 261 256 256 256 256
Effective tax rate (%) 1,898 2,111 2,554 2,775 3,093 Investments (Financial) 385 411 411 411 411
+ Associates/(Minorities) - - - - - Current Assets (ex Cash) Incl LT 29,539 31,979 34,416 37,402 40,597
Adjusted income 5,985 6,752 8,087 8,788 9,796 Cash 7,874 8,680 14,148 18,728 24,295
Extraordinary item (Loss)/Profit 468 830 - - - Current Liabilities 18,286 19,665 22,302 24,398 26,591
Reported PAT 6,453 7,582 8,087 8,788 9,796 Working capital 11,253 12,314 12,114 13,005 14,006
WANS 45 45 45 45 45 Capital deployed 25,170 27,121 32,505 38,050 44,602
FDEPS (Rs/share) 133.3 150.4 180.1 195.7 218.2 Contingent Liabilities - - - - -
BYRCS - Financials
Cash Flow (Rs m) FY22 FY23 FY24e FY25e FY26e Ratio analysis FY22 FY23 FY24e FY25e FY26e
P/E (x) 39.2 34.8 29.0 26.7 24.0
PBT 8,468 9,901 10,641 11,563 12,889
EV/EBITDA (x) 27.9 24.4 19.9 17.9 15.6
+ Non-cash items 774 1,018 1,111 1,143 1,222
EV/sales (x) 4.8 4.4 3.9 3.5 3.1
Operating profit before WC changes 9,242 10,919 11,752 12,706 14,111
P/B (x) 9.3 8.7 7.2 6.2 5.3
- Incr./(decr.) in WC 4,062 1,409 -200 891 1,002
RoE (%) 23.6 25.8 27.1 24.9 23.7
Others incuding taxes 3,025 3,417 3,497 3,680 3,988
RoCE (%) - After tax 22.7 24.7 26.1 24.1 23.0
Operating cash-flow 2,155 6,093 8,455 8,135 9,122
RoIC (%) - After tax 24.3 23.7 26.5 26.8 27.8
- Capex (tangible + Intangible) 473 726 1,000 1,000 1,000
DPS (Rs per share) 35.0 30.0 50.0 60.0 60.0
Free cash-flow 1,682 5,367 7,455 7,135 8,122
Dividend yield (%) 0.7 0.6 1.0 1.1 1.1
Acquisitions - - - - -
Dividend payout (%) 31.6 24.0 33.4 36.9 33.1
- Dividend (incl. buyback & taxes) 6,728 5,611 2,703 3,244 3,244 Net debt/equity (x) -0.3 -0.3 -0.5 -0.5 -0.6
+ Equity raised - - - - - Receivables (days) 68 70 66 66 66
+ Debt raised -263 -409 - - - Inventory (days) 194 215 225 224 224
- Fin Investments -1,115 -1,559 -716 -689 -689 Payables (days) 113 110 109 108 108
- Misc. Items (CFI + CFF) 42 112 - - - CFO:PAT% 36 90 105 93 93
Net cash-flow -4,236 794 5,468 4,580 5,567 FCF:PAT% - includ M&A payout 28 79 92 81 83
0
10
20
30
40
50
Apr-15 60
Aug-15
Jan-16
May-16
Oct-16
Source: Bloomberg, Anand Rathi Research

Feb-17
Jul-17
Nov-17
Apr-18
Aug-18
Jan-19
May-19
Oct-19
BYRCS – Valuation Charts
Feb-20
Jul-20
1-year-forward P/E
3,700
4,200
5,200
5,700
4,700
Nov-20
Dec-22 Apr-21
Sep-21
Jan-23
Jan-22
Jun-22
Feb-23
Oct-22
Mar-23 Mar-23
Jul-23
Apr-23 Dec-23
-1SD
Mean
+1SD
May-23
BYRCS Jun-23
0
5
10
15
20
25
30
35
40
Apr-15
Relative price performance
Jul-23
Sensex
Aug-15
Jan-16
Aug-23
May-16
Sep-23 Oct-16
Feb-17
Oct-23 Jul-17
Nov-17
Nov-23 Apr-18
Aug-18
Dec-23 Jan-19
May-19
Oct-19
Feb-20
Jul-20
1-year-forward EV/EBITDA
Nov-20
Apr-21
Sep-21
Jan-22
Jun-22
Oct-22
Mar-23
Jul-23
Dec-23
-1SD
Mean
+1SD
64
Agrochemicals
Initiating coverage
Rating: Buy
Target Price: Rs.1,200
Current market price: Rs.1058
Key data DAGRI IN

Dhanuka Agritech (DAGRI) 52-week high / low
Sensex / Nifty
Rs1064 / 603
72240 / 21,731
Making a foray into technical manufacturing to aid sustainable growth 3-m average volume $1m

Promoters 70.2 70.2 70.2
Free float 29.8 29.8 29.8
- Public 9.4 9.0 9.1
DAGRI - Investment Summary
Summary Asset-light business model with an extensive distribution network. Dhanuka Agritech has a unique asset-light business
model (three formulation facilities; focus on new products supported by tie-ups with global giants), re-inforced by an
extensive marketing network (6,500 dealers/distributors, 80,000 retailers), giving it an edge over competitors
The company made a foray into technical manufacturing (Rs3bn capex over FY22-24, funded via internal accruals) at
Foray into technical Dahej, Gujarat (with Rs1.5bn-2bn potential revenue in FY24 and Rs3bn from FY25). Phase-1 of the formulations unit
manufacturing to was commercialised in Aug’23 (currently, one molecule; potential to manufacture 4-5 molecules at this MPP), while the
sustain growth technical unit will be commercialised by end-FY24. Backward integration will largely take care of generics required.
The company intends to launch at least one 9(3) product each year, with a few more in-licensed products in coming
Product launches to years. Revenue from in-licensed products was 40% in FY23; ahead, it is likely to be in the same range. The company
propel growth launched five products in FY24 ytd at an innovation turnover index (ITI) of 16.4%. Ahead, it is confident of improving
this figure to 12% by FY25 led by robust pipeline of launches
We believe the execution and ramp-up of the Dahej project will set the company on the next leg of growth, which would
Favorable risk- lead to re-rating the stock over the longer term. DAGRI has a strong distribution-led business model with a strong RoE
reward (>23%) and balance sheet. We expect it to clock 13%/13% revenue/PAT CAGRs over FY23-FY26, boosted by healthy
demand and product launches. We initiate coverage on Dhanuka Agritech with a Buy at a TP of Rs.1,200 16x FY26e EPS
40
DAGRI - Investment summary
Valuation We believe the execution and ramp-up of the Dahej project will set the company on the next leg of growth, which would lead to re-rating
the stock over the longer term. DAGRI has a strong distribution-led business model with a strong RoE (>23%) and balance sheet. We
expect it to clock 13%/13% revenue/PAT CAGRs over FY23-FY26, boosted by healthy demand and product launches. We initiate
coverage on Dhanuka Agritech with a Buy at a TP of Rs.1,200, 16x FY26e EPS.

2) Delay in ramp-up of technical capacities in Dahej

Sales (Rsm) 14,778 17,002 19,202 21,623 24,286
Net profit (Rsm) 2,088 2,335 2,727 3,022 3,403
EPS (Rs) 44.8 51.2 59.8 66.3 74.7
PE (x) 20.4 17.8 15.3 13.8 12.2
EVEBITDA (x) 14.5 14.0 10.8 8.8 7.2
PBV (x) 4.3 3.9 3.2 2.7 2.2
RoE (%) 23.8 23.1 23.1 21.0 19.7
RoCE (%) 23.8 23.1 23.1 21.0 19.7
Dividend yield (%) 0.7 0.2 0.7 0.7 0.7
Net debt/equity (x) -0.4 -0.2 -0.3 -0.4 -0.5

DAGRI – Story in charts
Revenue and revenue growth trends (%) West and South contributes >60% of revenue (%)
(Rsm) (%) (%)
100
30,000 30.0
23.9 24.8 33.5 32.0 28.5 31.0 28.7 28.7 31.1
25,000 25.0 80
20,000 20.0 12.5 12.1 10.9 10.9 9.8
15.1 60 11.2 11.0 11.0
15,000 12.9 12.6 12.3 15.0
11.4 35.5 31.5 34.2 34.2 32.3
9.0 40 29.9 31.0 33.0
10,000 6.3 5.6 6.6 6.5 10.0
4.5
5,000 5.0 20
27.2 25.5 26.0 27.9 25.0 26.2 26.2 26.8
0 0.0 0
FY24e
FY25e
FY26e
FY23
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
Revenue Growth (%) (RHS) North West East South
(%)
Herbicides and insecticides contributes >70% to revenues (%) (Rsm) EBITDA and EBITDA margin trends (%) (%)
100 5,000 25.0
11.1 10.0 10.8 13.0 11.0 12.0 12.0 11.0
19.2 19.4 18.2 18.6 18.8
80 15.8 15.0 15.2 15.5 15.0 17.0 19.0 17.0 4,000 16.8 16.9 17.3 17.8 20.0
16.4
14.5 15.5
60 3,000 15.0
43.3 45.0 44.3 42.7 43.0 41.0 37.0 35.0
40 2,000 10.0
1,000 5.0
20 31.0 32.0 37.0
29.8 30.0 29.8 28.9 30.0
0 0.0
0
FY24e
FY25e
FY26e
FY18
FY15
FY16
FY17
FY19
FY20
FY21
FY22
FY23
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
EBITDA (Rs mn) EBITDA Margins (%) (RHS)

Herbicides Insecticide Fungicide Others
DAGRI - Story in charts
Likely to generate Rs6.5bn free cash over FY23-26 (Rs m) 32 products launched in the last six years (FY18-FY24 ytd)
Dumil Herbicide
(Rsm)
2850
Fenox - 1000 Herbicide
2,550
3,000
2482
2311
Godiwa Fungicide
2,188
2,182
2014
2,500 Godiwa Super Fungicide
FY18
1621
2,000 Marker Super Insecticide
1,396
1397
1,314
1377
1,517
1362
D-one Insecticide
1099
1043
1,500
1,126
Suelo Soil health enhancer

846
1,000
631
Domar Insecticide
461
438
363
500 Apply Insecticide
FY19 -4 43 FY19 Largo Thripicide
0
Chempa Herbicide
-500 Mycore Soil health enhancer
FY26e
FY24e
FY25e
FY15
FY16
FY17
FY18
FY20
FY21
FY22
FY23
Zapac Insecticide
FY20
Pro-rin Insecticide
Operating cashflow Free cashflow Prodhan Insecticide
Dabooch Herbicide
Ahead, return ratios likely to be upward of 20% (%) Dozo Maxx Herbicide
(%) Kirari Fungicide
33 FY21
Nissodium Fungicide
31
Craze-D Herbicide
29 Ripple Insecticide
27 Onekil Herbicide
25 FY22
Tornado Herbicide
23 Zanet Fungicide
21 Decide Insecticide
19 Implode Herbicide
17 FY23 Mesotrax Herbicide
15 Downil Biological fungicide
FY24e
FY25e
FY26e
FY23
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
Spornil Biological weedicide

Whiteaxe Insecticide
RoE RoCE Tizom Herbicide
YTDFY24
Source: Company, Anand Rathi Research Semacia Insecticide 43
DAGRI - Financials
Revenues 14,778 17,002 19,202 21,623 24,286 Share capital 93 91 91 91 91
Growth (%) 6.5 15.1 12.9 12.6 12.3 Net worth 9,604 10,613 13,010 15,703 18,776
Raw material 9,391 11,155 12,194 13,687 15,349
Total debt (including Pref) 10 38 - - -
Minority interest - - - - -
EBITDA 2,634 2,787 3,495 4,022 4,567
Deferred tax Liability/(Asset) 56 24 24 24 24
EBITDA margins (%) 17.8 16.4 18.2 18.6 18.8
- Depreciation 163 176 280 298 315
Other income 336 448 358 340 323
Interest expense 32 31 32 25 25 CWIP (tangible and intangible) 483 1,532 50 50 50
PBT 2,775 3,027 3,541 4,039 4,550 Investments (Strategic) 1,398 1,589 1,589 1,589 1,589
Effective tax rate (%) 23 23 25 25 - Investments (Financial) 1,961 958 958 958 958
Adjusted income 2,088 2,335 2,727 3,022 3,403 Cash 24 43 1,397 3,565 6,084
Extraordinary item (Loss)/Profit - - - - - Current Liabilities 3,452 3,378 3,658 4,103 4,604
FDEPS (Rs/share) 44.8 51.2 59.8 66.3 74.7 Contingent Liabilities 93 91 91 91 91
DAGRI - Financials
P/E (x) 20.4 17.8 15.3 13.8 12.2
PBT 2,775 3,027 3,541 4,039 4,550
EV/EBITDA (x) 14.5 14.0 10.8 8.8 7.2
+ Non-cash items 195 207 312 323 340
EV/sales (x) 2.6 2.3 2.0 1.6 1.4
P/B (x) 4.3 3.9 3.2 2.7 2.2
- Incr./(decr.) in WC 1,018 711 667 522 570
RoE (%) 23.8 23.1 23.1 21.0 19.7
Others incuding taxes 909 1,161 1,172 1,358 1,470
RoCE (%) - After tax 23.8 23.1 23.1 21.0 19.7
RoIC (%) - After tax 24.4 22.1 22.4 21.6 22.6
- Capex (tangible + Intangible) 192 992 618 300 300
DPS (Rs per share) 6.0 2.0 6.0 6.0 6.0
Free cash-flow 851 370 1,396 2,182 2,550
Dividend yield (%) 0.7 0.2 0.7 0.7 0.7
Dividend payout (%) 16.1 4.7 12.1 10.9 9.7
- Dividend (incl. buyback & taxes) 502 318 329 329 329
Net debt/equity (x) -0.4 -0.2 -0.3 -0.4 -0.5
+ Equity raised - -1,048 - - - Receivables (days) 65 67 70 71 71
+ Debt raised -74 28 -38 - - Inventory (days) 125 113 109 109 109
- Fin Investments 234 -1,018 -358 -340 -323 Payables (days) 55 57 54 52 52
- Misc. Items (CFI + CFF) 32 31 32 25 25 CFO:PAT% 50 58 74 82 84
Net cash-flow 9 20 1,355 2,168 2,519 FCF:PAT% - includ M&A payout 41 16 51 72 75
10.0
20.0
30.0
40.0
50.0
60.0
0.0
Apr-15
Aug-15
Jan-16
May-16
Oct-16
Feb-17

Jul-17
Nov-17
Apr-18
Aug-18
Jan-19
May-19
Oct-19
600
700
800
900
1,000
1,100
DAGRI – Valuation Charts
Feb-20
Dec-22 Jul-20
1-year-forward P/E
Nov-20
Jan-23
Apr-21
Feb-23 Sep-21
Jan-22
Mar-23 Jun-22
Oct-22
Apr-23 Mar-23
Jul-23
May-23 Dec-23
DAGRI
-1SD
Mean
+1SD
Jun-23
Jul-23
0
5
10
15
20
25
30
35
Sensex
Apr-15
Aug-23
Aug-15
Jan-16
Sep-23
May-16
Oct-23 Oct-16
Feb-17
Nov-23 Jul-17
Nov-17
Dec-23 Apr-18
Aug-18
Jan-19
May-19
Oct-19
Feb-20
Jul-20
Nov-20
Apr-21
Sep-21
Jan-22
Jun-22
Oct-22
Mar-23
Jul-23
Dec-23
-1SD
Mean
+1SD
64
Agrochemicals
Initiating coverage
Rating: Buy
Target Price: Rs.500
Key data SUMICHEM IN

Sumitomo Chemicals (SUMICHEM) 52-week high / low
Sensex / Nifty
Rs499 / 371
72240 / 21,731
Near term hiccups; long-term intact 3-m average volume $1.3m

Promoters 75.0 75.0 75.0
Free float 25.0 25.0 25.0
- Public 16.3 17.0 17.1
SUMICHEM - Investment Summary
Summary Strong parental advantage to support growth: Strong parental support from Sumitomo Chemical Corporation (SCC) gives
SCIL unique advantages like a) access to world class portfolio across geographies; b)greener chemistries and R&D
expertise for developing proprietary products; and c) financial strength and larger market reach
Sumitomo Chemicals is the only technical and generic grade manufacturing site for the SCC group outside Japan. It
To be the ‘Go to guy’ for intends to increase exports by levering SCC's global supply chain and marketing network (approvals received for five
SCC’s generic exports molecules). We expect export revenue to come at a 35% CAGR over FY24-FY26 (FY20-23: 23%) on SCC's intent to
globally maximize synergies on the integration of Nufarm's distribution business in LATAM and Sumitomo’s export business
The company’s merger with ECC, a boon for both: On the amalgamation of Excel Cropcare, Sumitomo Chemicals, India,
SCIL's merger with is one of the top three domestic agrochemicals manufacturers (~10% market share). Further, the merger brings
ECC, a boon for benefits such as a) integrated production facilities in formulations and technicals; (b) enhanced distribution reach:
both >13,000 distributors, 40,000 dealers; (c) sharper focus on specialty/brand-named molecules; (d) healthy product
pipeline of specialty molecules
With all the above, the company is poised to post 4%/7% revenue/PAT CAGRs over FY23-26 (FY18-23: 13%/28%).
Favorable risk- Further, it had a healthy 23% RoE, 30% pre-tax RoCE and net cash balance sheet in FY23. We initiate coverage on
reward Sumitomo Chemicals with a Buy at a TP of Rs.500, 40x FY26e EPS
48
SUMICHEM - Investment summary
Valuation With all the above, the company is poised to post 4%/7% revenue/PAT CAGRs over FY23-26 (FY18-23: 13%/28%).
Further, it had a healthy 23% RoE, 30% pre-tax RoCE and net cash balance sheet in FY23. We initiate coverage on
Sumitomo Chemicals with a Buy at a TP of Rs.500, 40x FY26e EPS.

2) Ban on glyphosate (15-16% of FY23 revenue)

Sales (Rsm) 30,612 35,110 28,969 34,709 39,705
Net profit (Rsm) 4,235 5,022 3,574 5,083 6,138
EPS (Rs) 8.5 10.1 7.2 10.2 12.3
PE (x) 48.3 40.7 57.3 40.3 33.3
EVEBITDA (x) 33.4 29.9 42.5 29.9 24.3
PBV (x) 10.6 8.6 7.7 6.7 5.7
RoE (%) 24.4 23.3 14.2 17.8 18.4
RoCE (%) 24.4 23.3 14.3 17.9 18.6
Dividend yield (%) 0.2 0.3 0.4 0.4 0.4
Net debt/equity (x) -0.2 -0.2 -0.3 -0.3 -0.4

SUMICHEM – Story in charts
Revenue growth to be largely driven by export revenue Greater contribution of specialised molecules would boost margins
(Rsm) (%) (Rsm) (%)
45,000 25.0 9,000 25.0
40,000 16.5 15.7 14.7 17.2 20.0 8,000 19.6 19.8
14.3 18.4 19.0 18.8
35,000 8.8 9.1 15.0 7,000 20.0
16.0
30,000 10.0 6,000 13.0 13.7
25,000 5.0 5,000 15.0
20,000 0.0 4,000 10.0
15,000 -5.0 3,000
10,000 -16.3 -10.0 2,000 5.0
5,000 -15.0 1,000
0 -20.0 0 0.0
FY24e
FY25e
FY26e
FY24e
FY25e
FY26e
FY19
FY20
FY21
FY22
FY23
FY19
FY20
FY21
FY22
FY23
Revenue Growth (%) (RHS) EBITDA EBITDA Margin (%) (RHS)
Stable return ratios, upward of 25% Likely to generate Rs11bn free cash over FY23-26
(%)
40 (Rsm)
6,440
32.8 33.2
35 30.3 7,000
5,401
5,167
30 26.2 26.1 24.9 6,000
23.7
4,690
4,254
25
3,894
19.3 5,000
3,826
25.0
3,401
20 24.4 23.3 4,000
3,167
2,698
20.8
2,218
2,214
15 18.3
2,000
17.9 17.6
2000
3,000
1750
10 14.4
1,195
1,125
1,837
1,093
2,000
777
5
428
390
377
387
0 1,000
0
FY25e
FY24e
FY26e
FY19
FY20
FY21
FY22
FY23
FY24e
FY25e
FY26e
FY19
FY20
FY21
FY22
FY23
RoE RoCE
OCF FCFF Capex
SUMICHEM - Story in charts
Share of exports in overall revenue likely to improve (%) Region-wise export revenue, H1 FY24
(%) Africa Australia N America
100 18% 0% 9%
78 80 82 83 79
80 76 73 76
60
S America
40 27 28%
22 20 24 21 24
18 17 Japan
20
18%
0
FY24e
FY25e
FY26e
FY19
FY20
FY21
FY22
Domestic FY23
Exports
Asia Europe
18% 9%
Steady increase of specialty revenue to overall sales In line with industry trend; insecticides dominate the segment
(%)
Metal Phosphides AND & EHD
80 73 71 70 71 72 69 7%
68 68 7%
60
PGR Insecticides
40 10% 40%
29 32 30 29 28 31 32
27
20
0
FY24e
FY25e
FY26e
FY19
FY21
FY22
FY23
FY20
Generics Speciality Herbicides Fungicides

Source: Company, Anand Rathi Research 29% 7% 51
SUMICHEM – Enhanced focus on specialty molecules to drive growth
Consistently banking on registrations; fifteen 9(3) registrations in the last five years
Year Company Technical Name Registration Section
FY24 Sumitomo Chemicals, India Clothianidin technical 98% w/w min 9(4)
FY24 Sumitomo Chemicals, India Profenofos 50% + Fenpropathrin 5% EC 9(3)
FY24 Sumitomo Chemicals, India Etoxazole technical 94.6% w/w 9(3)
FY24 Sumitomo Chemicals, India Etoxazole 6% + Abamectin 1.5% SC 9(3)
FY24 Sumitomo Chemicals, India Imezathapyr technical 98% w/w min. 9(4)
FY23 Sumitomo Chemicals, India Gibberellic acid 0.1% GR 9(3)
FY23 Sumitomo Chemicals, India Ethaboxam technical 97.0% w/w min 9(3)
FY23 Sumitomo Chemicals, India Ethaboxam 40% SC 9(3)
FY23 Sumitomo Chemicals, India Gibberellic acid 1.8% + 6-Benzyl Adenine 1.8% L (Promalin) 9(3)
FY23 Sumitomo Chemicals, India Tribasic copper sulphate 34.5% SC 9(3)
FY22 Sumitomo Chemicals, India Pyriproxyfen technical 95% w/w 9(3)
FY22 Sumitomo Chemicals, India Clothianidin 3.5% + Pyriproxyfen 8% SE 9(3)
FY22 Sumitomo Chemicals, India Fenpropathrin 10% EW 9(3)
FY22 Sumitomo Chemicals, India Pyriproxyfen 10% EW 9(3)
FY21 Sumitomo Chemicals, India Clothianidin Technical 95% w/w min 9(3)
FY21 Sumitomo Chemicals, India Cartap hydrochloride technical 98% w/w min 9(4)
FY21 Sumitomo Chemicals, India Gibberellic acid 0.1% GR 9(3)
FY21 Sumitomo Chemicals, India Clothianidin 0.5% w/w GR 9(3)
FY20 Excel Crop Care Paclobutrazole 40% w/w SC 9(3)
FY20 Excel Crop Care Flumioxazine Technical 96% w/w min 9(3)
Key products Domestic: bulk and brand-named break-up (%) Exports: bulk and brand-named break-up (%)
Key products Category Use Bulk
Glyphosate Herbicide Paddy, cotton, tea gardens, non 18%
Fenpropathrin Insecticide cropped
Profenophos
Insecticide Cotton, soybean Brand
Pyriproxyfen 39%
Clothianidin Insecticide Vegetables
Tebuconazole Fungicide Wheat, soybeans, chillies
Gibberallic acid PGR Citrus fruits Bulk
Aluminium phosphide Fumigant Warehousing of foodgrains 61%
Chlorpyriphos Insecticide Paddy beans, gram
DL-Methionine Animal nutrition Poultry Brand
Source: Company, Anand Rathi Research 82% 52
SUMICHEM - Financials
Revenues 30,612 35,110 28,969 34,709 39,705 Share capital 4,991 4,991 4,991 4,991 4,991
Growth (%) 15.7 14.7 -17.5 19.8 14.4 Net worth 19,272 23,818 26,487 30,665 35,899
Raw material 19,080 22,706 19,062 22,561 24,816
Total debt (including Pref) 247 177 - - -
Minority interest 0 0 - - -
EBITDA 5,999 6,666 4,635 6,525 7,862
Deferred tax Liability/(Asset) - - - - -
EBITDA margins (%) 19.6 19.0 16.0 18.8 19.8
- Depreciation 448 519 624 747 882
Other income 268 449 807 1,050 1,364
Interest expense 62 54 53 51 50 CWIP (tangible and intangible) 211 535 535 535 535
PBT 5,757 6,542 4,765 6,777 8,294 Investments (Strategic) 3,560 2,388 2,388 2,388 2,388
Effective tax rate (%) 26 23 25 25 26 Investments (Financial) 1 1 1 1 1

Adjusted income 4,235 5,022 3,574 5,083 6,138 Cash 791 3,028 5,097 7,457 11,201
Extraordinary item (Loss)/Profit - - - - - Current Liabilities 10,577 9,696 10,185 10,749 12,815
FDEPS (Rs/share) 8.5 10.1 7.2 10.2 12.3 Contingent Liabilities - - - - -
SUMICHEM - Financials
P/E (x) 48.3 40.7 57.3 40.3 33.3
PBT 5,757 6,542 3,958 5,727 6,930
EV/EBITDA (x) 33.4 29.9 42.5 29.9 24.3
+ Non-cash items 510 573 677 798 932
EV/sales (x) 6.6 5.7 6.8 5.6 4.8
P/B (x) 10.6 8.6 7.7 6.7 5.7
- Incr./(decr.) in WC 2,576 1,352 -952 564 622
RoE (%) 24.4 23.3 14.2 17.8 18.4
Others incuding taxes 1,473 1,869 384 645 792
RoCE (%) - After tax 24.4 23.3 14.3 17.9 18.6
RoIC (%) - After tax 24.4 23.3 14.2 17.8 18.4
- Capex (tangible + Intangible) 1,125 1,195 2,000 2,000 1,750
DPS (Rs per share) 1.0 1.2 1.5 1.5 1.5
Free cash-flow 1,093 2,698 3,203 3,316 4,698
Dividend yield (%) 0.2 0.3 0.4 0.4 0.4
Dividend payout (%) 11.8 11.9 20.9 14.7 12.2
- Dividend (incl. buyback & taxes) 400 499 904 904 904
Net debt/equity (x) -0.2 -0.2 -0.3 -0.3 -0.4
+ Equity raised - - 0 - -
Receivables (days) 101 93 115 101 103
+ Debt raised - - -177 - - Inventory (days) 162 147 173 143 134
- Fin Investments 1,777 2,077 - - - Payables (days) 208 163 190 169 173
- Misc. Items (CFI + CFF) 226 226 53 51 50 CFO:PAT% 52 78 146 105 105
Net cash-flow -1,311 -104 2,068 2,361 3,743 FCF:PAT% - includ M&A payout 26 54 90 65 76
10.0
20.0
30.0
40.0
50.0
60.0
70.0
0.0
Jan-20
Mar-20
Jun-20
Aug-20
Oct-20
Dec-20

Feb-21
Apr-21
Jun-21
Aug-21
Oct-21
Dec-21
Mar-22
350
400
450
500
550
600
May-22
Dec-22 Jul-22
1-year-forward P/E
Sep-22
SUMICHEM – Valuation Charts
Jan-23 Nov-22
Jan-23
Feb-23
Mar-23
Mar-23 May-23
Jul-23
Apr-23 Oct-23
Dec-23
May-23
Mean
-1SD
+1SD
SUMICHEM
Jun-23
Jul-23
10.0
20.0
25.0
30.0
35.0
40.0
45.0
15.0
0.0
5.0
Sensex
Jan-20
Aug-23
Mar-20
Sep-23 Jun-20
Aug-20
Oct-23 Oct-20
Dec-20
Nov-23 Feb-21
Apr-21
Dec-23 Jun-21
Aug-21
Oct-21
Dec-21
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
Oct-23
Dec-23
-1SD
Mean
+1SD
64
Agrochemicals
Initiating coverage
Rating: Buy
Target Price: Rs.690
Key data UPLL IN

UPL (UPLL) 52-week high / low
Sensex / Nifty
Rs780 / 528
72240 / 21,731
Challenges subsiding! 3-m average volume $16.8m

Promoters 32.3 32.3 32.3
Free float 67.7 67.7 67.7
- Public 16.8 14.4 14.5
UPL - Investment Summary
Summary Top generics manufacturer globally: UPL is one of the top five agrochemicals manufacturers globally. It is the top global
generics manufacturer with a well-balanced product portfolio across regions and crops
Brazil is the fastest growing region for UPL (~$1.5bn revenue estimated for FY23; the fourth largest in Brazil). The
LATAM, the key country brings >50% to LATAM revenue, and is expected to grow twice the industry growth over next few years on the
region (~40% of back of the company’s strong product pipeline and wide distribution
revenue)
We expect a gradual recovery in margins from H2 FY24 as the drop in finished goods prices (in line with the fall in RM
Margins expected prices) seems to be arrested now. This, liquidation of high-cost stocks inventory and stable RM costs are likely to result
to recover from H2 in margin expansion in H2 FY24. ~60% of UPL’s annual revenues/profits arise in the second half, with the fourth
FY24 quarter bringing ~30% to annual revenues. Thus, we expect the strong margin expansion in Q4 FY24 to be aided by a)
superior operating leverage and b) the low base
We anticipate the better performance in H2 FY24, particularly in Q4, to be driven by greater demand across markets
Favorable risk- (barring NAFTA), supported by higher commodity prices. We expect UPL to clock 3%/12% revenue/PAT CAGRs over
reward FY23-26. We initiate coverage on the company with a Buy at a TP of Rs.690, 10x FY26e EPS
57
UPLL - Investment summary
Valuation We anticipate the better performance in H2 FY24, particularly in Q4, to be driven by greater demand across markets
(barring NAFTA), supported by higher commodity prices. We expect UPL to clock 3%/12% revenue/PAT CAGRs over
FY23-26. We initiate coverage on the company with a Buy at a TP of Rs.690, 10x FY26e EPS
Key risks 1) Volatile global commodity prices

2) Adverse weather in key markets: LATAM, NAFTA
3) Adverse forex movements

Sales (Rsm) 462,400 535,760 506,762 542,529 589,866
Net profit (Rsm) 36,260 35,700 22,979 39,440 49,542
EPS (Rs) 50.9 49.5 33.3 55.3 68.7
PE (x) 11.6 11.9 17.7 10.7 8.6
EVEBITDA (x) 6.4 5.6 5.8 4.6 3.8
PBV (x) 2.0 1.6 1.6 1.4 1.3
RoE (%) 19.7 15.3 9.1 13.9 15.5
RoCE (%) 11.6 11.8 10.7 13.0 14.2
Dividend yield (%) 1.7 1.7 1.7 1.7 1.7
Net debt/equity (x) 0.8 0.6 0.4 0.3 0.2

UPLL – Story in charts
40% of revenues from LATAM (Rs m) Sharper focus on differentiated products likely to support margins (%)
(Rsm)
(Rsm) (%)
600,000 23.2
160,000 22.1 22.0 20.8 22.3 25.0
500,000 20.2 20.9 19.9 20.0
140,000 18.6 17.9 18.0 18.8 19.5 18.3
400,000 120,000 17.0 20.0
300,000 100,000 15.0
200,000 80,000
60,000 10.0
100,000 40,000 5.0
0 20,000
FY24e
FY25e
FY26e
FY22
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY23
0 0.0
FY24e
FY25e
FY26e
FY18
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY19
FY20
FY21
FY22
FY23
NAFTA Europe LATAM India RoW EBITDA EBITDA margin (%) (RHS)
Return ratios to improve (%) Rising share of brand-named products in the overall portfolio (%)
(%) 120%
30 27.1
25.2 100% 6% 5%
10% 22% 14%
25 25%
20.1 20.7 19.7 80%
20 18.0 18.3 17.3 17.9
15.7 16.7 21.6 20.0 22.1 21.9
19.5 14.3 13.9 15.5
15.3 60%
94% 95%
15 18.2 40% 90% 78% 86%
16.8 16.6 16.7 9.1 16.0 75%
10 12.9 14.2 14.3 12.1 20%
11.2 9.9
5 0%
India
RoW
Overall
Europe
Latin America
North America
0
FY24e
FY25e
FY26e
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
RoE RoCE Branded Generic

UPLL – Business re-structuring to unlock growth
Unlocking value, Unleashing growth
Platforms International crop protection platform India crop protection platform Global seeds platform Manufacturing & Specialty chemicals
UPL Corporation; Cayman UPL Sustainable Agri Solution Advanta Enterprise UPL
UPL Holding (%) 78 91 87 100
ADIA
ADIA
Partners TPG KKR
TPG
Brookfield
To be the fastest growing large crop-protection Transform Indian agriculture with Establish a leading position in specialty Continue scaling up the platform rapidly
Growth ambition manufacturer by offering innovative crop-care outcome-oriented solutions, enhancing crops through a combination of organic capitalising on the strong sector tailwinds
solutions economic resilience of >100m growers growth initiatives and bolt-on acquisitions and enormous market potential

UPLL – Debt profile
Debt profile by currency (%) Debt Profile by maturity (%)
INR Others
BRL FY2024
2% 1%
2% 7%
Beyond FY28
46%
FY26-27
47%
USD
95%
Quarterly variation in debt (Rs m)

Particulars Q1 FY21 * Q2 FY21 * Q3 FY21 * Q4 FY21 * Q1 FY22 * Q2 FY22 * Q3 FY22 * Q4 FY22 * Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24
Gross debt 355,730 345,680 307,480 267,600 280,850 301,330 304,190 288,520 331,090 355,360 357,890 259,850 330,690 369,200
Cash 104,620 79,750 35,920 48,530 36,320 28,680 36,650 69,600 36,430 40,380 52,750 60,970 38,890 32,370
Net debt 251,110 265,930 271,560 219,070 244,530 272,650 267,540 218,920 294,660 314,980 305,140 198,880 291,800 336,830
UPLL - Financials
Revenues 462,400 535,760 506,762 542,529 589,866 Share capital 1,530 1,500 1,500 1,500 1,500
Growth (%) 19.5 15.9 -5.4 7.1 8.7 Net worth 216,750 268,580 282,521 312,924 353,428
Raw material 220,720 272,810 261,489 265,839 286,085
Total debt (including Pref) 288,520 259,850 229,850 199,850 169,850
Minority interest 46,470 55,850 55,850 55,850 55,850
EBITDA 101,650 111,600 101,298 121,186 136,720
Deferred tax Liability/(Asset) 3,990 -1,990 -1,990 -1,990 -1,990
EBITDA margins (%) 22.0 20.8 20.0 22.3 23.2
- Depreciation 23,590 25,470 28,348 29,928 31,824
Other income -3,550 -4,870 -3,750 -850 -850
Interest expense 22,950 29,630 35,200 32,500 30,600 CWIP (tangible and intangible) 11,840 11,970 11,970 11,970 11,970
PBT 54,217 53,024 36,000 59,908 75,446 Investments (Strategic) - - - - -
Effective tax rate (%) 11 15 15 15 16 Investments (Financial) 10,820 15,780 15,780 15,780 15,780
+ Associates/(Minorities) 6,770 6,870 3,921 7,782 10,152 Current Assets (ex Cash) Incl LT 338,670 366,640 354,295 369,654 399,367
Adjusted income 38,917 37,094 24,979 41,440 51,542 Cash 69,600 61,430 65,183 65,831 73,584
Extraordinary item (Loss)/Profit 2,657 1,394 2,000 2,000 2,000 Current Liabilities 250,300 276,870 275,988 281,665 300,801
FDEPS (Rs/share) 50.9 49.5 33.3 55.3 68.7 Contingent Liabilities
UPLL - Financials
P/E (x) 11.6 11.9 17.7 10.7 8.6
PBT 49,660 51,500 34,000 57,908 73,446
EV/EBITDA (x) 6.4 5.6 5.8 4.6 3.8
+ Non-cash items 46,540 55,310 63,548 62,428 62,424
EV/sales (x) 1.4 1.2 1.2 1.0 0.9
P/B (x) 2.0 1.6 1.6 1.4 1.3
- Incr./(decr.) in WC 17,670 13,690 -11,463 9,682 10,577
RoE (%) 19.7 15.3 9.1 13.9 15.5
Others incuding taxes 13,570 15,610 7,271 17,618 23,053
RoCE (%) - After tax 11.6 11.8 10.7 13.0 14.2
RoIC (%) - After tax 19.7 15.3 9.1 13.9 15.5
- Capex (tangible + Intangible) 26,880 23,600 20,000 20,000 24,000
DPS (Rs per share) 10.0 10.0 10.0 10.0 10.0
Free cash-flow 38,080 53,910 81,741 73,036 78,240
Dividend yield (%) 1.7 1.7 1.7 1.7 1.7
Dividend payout (%) 23.7 24.4 36.2 21.8 17.5
- Dividend (incl. buyback & taxes) 9,220 21,050 9,038 9,038 9,038
Net debt/equity (x) 0.8 0.6 0.4 0.3 0.2
+ Equity raised - - - - - Receivables (days) 112 114 128 121 120
+ Debt raised 12,200 -48,510 -30,000 -30,000 -30,000 Inventory (days) 186 181 191 184 179
- Fin Investments 11,310 -8,700 3,750 850 850 Payables (days) 240 229 242 235 227
- Misc. Items (CFI + CFF) 22,190 (7,290) 35,200 32,500 30,600 CFO:PAT% 167 209 407 225 198
Net cash-flow 7,560 340 3,753 648 7,752 FCF:PAT% - includ M&A payout 98 145 327 176 152
10.0
15.0
20.0
25.0
0.0
5.0
Apr-15
Aug-15
Jan-16
May-16
Oct-16
Feb-17

Jul-17
Nov-17
Apr-18
Aug-18
Jan-19
May-19
Oct-19
UPLL – Valuation Charts
500
550
600
650
700
750
800
850
900
950
Feb-20
Dec-22 Jul-20
Nov-20
1-year-forward P/E
Jan-23
Apr-21
Feb-23 Sep-21
Jan-22
Mar-23 Jun-22
Oct-22
Apr-23 Mar-23
Jul-23
May-23 Dec-23
Mean
-1SD
+1SD
UPLL
Jun-23
Jun-23
10.0
12.0
0.0
2.0
4.0
6.0
8.0
Sensex Jul-23
Apr-15
Aug-23 Aug-15
Jan-16
Sep-23 May-16
Oct-16
Oct-23
Feb-17
Nov-23 Jul-17
Nov-17
Dec-23 Apr-18
Aug-18
Jan-19
May-19
Oct-19
Feb-20
Jul-20
Nov-20
Apr-21
Sep-21
Jan-22
Jun-22
Oct-22
Mar-23
Jul-23
Dec-23
-1SD
Mean
+1SD
64
Appendix
Anand Rathi Research
Analyst Certification
The views expressed in this Research Report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. The research analysts are bound by stringent internal regulations and
also legal and statutory requirements of the Securities and Exchange Board of India (hereinafter “SEBI”) and the analysts’ compensation are completely delinked from all the other companies and/or entities of Anand Rathi, and have no bearing whatsoever on any recommendation that they have given in the Research Report.
Anand Rathi Ratings Definitions
Analysts’ ratings and the corresponding expected returns take into account our definitions of Large Caps, Mid Caps & Small Caps as described in the Ratings Table below:
Ratings Guide (12 months) Buy Hold Sell
Large Caps (Top 100 companies) >15% 0-15% <0%
Mid Caps (101 -250 company)
st th >20% 0-20% <0%
Small Caps (251st company onwards) >25% 0-25% <0%
Research Disclaimer and Disclosure inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014
Anand Rathi Share and Stock Brokers Ltd. (hereinafter refer as ARSSBL) (Research Entity, SEBI Regn No. INH000000834, Date of Regn. 29/06/2015) is a subsidiary of the Anand Rathi Financial Services Ltd. ARSSBL is a corporate trading and clearing member of Bombay Stock Exchange Ltd, National Stock Exchange of India Ltd. (NSEIL), Multi Stock Exchange of India Ltd (MCX-SX), and also depository
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4 Agrochemicals Stocks To Buy by Anand Rathi

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Agrochemicals India I Equities

Initiating coverage 1 January, 2024

Agrochemicals: This time it’s different Sensex: 72240

Himanshu Binani | Research Analyst

Corn Wheat Soybean Cotton

Revenue is expected to be at Yen610bn; up 2% YoY (Price/Vol/FX of

Source: Company; Anand Rathi Research 4

2011-12 18.5 32.5

2012-13 18.2 31.8

2013-14 18.6 30.8

2021-22 19.0 28.5

2020-21 20.2 25.6

2016-17 18.0 29.3

2018-19 17.6 29.0

2019-20 18.4 26.7

Maize YoY gr. (RHS) Cotton YoY gr. (RHS)

What does it mean for the generic manufacturers?

Source: Company, Anand Rathi Research 9

Industry size YoY gr. (%) (RHS)

Source: Company, Anand Rathi Research 13

Insecticide Off patented Generic Players

Key manufacturers globally

World 3,342 4,116,832 NA

Source: Industry, Anand Rathi Research 21

Competitive positioning of domestic companies

Source: Industry, Anand Rathi Research 23

Current slowdown not as bad as the last one

Source: Industry, Anand Rathi Research 24

Bayer Crop Science – Market dominance likely to endure; Buy

UPL – Challenges subsiding; Buy

PE(x) Price/Book Value (x) EV/EBITDA (x)

Source: Industry, Anand Rathi Research 27

Key data BYRCS IN

Shareholding (%) Sep'23 Jun'23 Mar'23

Key risks 1) Poorer-than-expected monsoons

Financial Summary Y/E Mar FY22 FY23 FY24e FY25e FY26e

Source: Company, Anand Rathi Research 31

100% subsidiary of Bayer AG; Subsidiary of Bayer AG; Since

Source: Company, Anand Rathi Research 32

FY23 Tetraniliprole 40.34% FS 9(3) Indigenous manufacture

Strong maize prices in domestic markets

17% y/y in Nov’23) should support growth in the near/medium term

Source: Bloomberg, Anand Rathi Research

Key data DAGRI IN

Shareholding (%) Sep'23 Jun'23 Mar'23

Key risks 1) Poorer-than-expected monsoons

Financial Summary Y/E Mar FY22 FY23 FY24e FY25e FY26e

Source: Company, Anand Rathi Research 41

EBITDA (Rs mn) EBITDA Margins (%) (RHS)

Suelo Soil health enhancer

Spornil Biological weedicide

Source: Bloomberg, Anand Rathi Research

Key data SUMICHEM IN

Shareholding (%) Sep'23 Jun'23 Mar'23

Key risks 1) Poorer-than-expected monsoons

Financial Summary Y/E Mar FY22 FY23 FY24e FY25e FY26e

Source: Company, Anand Rathi Research 49

Generics Speciality Herbicides Fungicides

Effective tax rate (%) 26 23 25 25 26 Investments (Financial) 1 1 1 1 1