Insecticides (India) Limited — Q4 FY25 earnings call

Call held 28 May 2025

Management summary

Insecticides India Limited reported a strong Q4 and FY25, driven by new product launches, premium product mix, and improved margins. The Dahej plant is set to commence production in June, expected to significantly contribute to FY26 revenue. While strategic inventory buildup and manpower shortages were noted, management expressed confidence in continued double-digit growth and margin improvement.

Highlights

  • Strong revenue growth of ~32% in Q4 FY25, driven by premium products like Shinwa, Izuki, Mission, Mycoraja, and new launches.

  • Gross profit margin for FY25 improved to 32%, a 655 bps increase over last year, due to better product mix and improved pricing strategy.

  • EBITDA margin for FY25 improved by 281 bps to 11.1%, and Q4 EBITDA improved by 226% to 7.9%.

  • Dahej plant, with an investment of Rs. 150 crores, received in-principle approval and will commence production in June 2025, expected to contribute ~Rs. 100 crores in FY26.

  • Successful launch of 12 products in FY25, with 4 elevated to Focused Maharatna, indicating strong market acceptance.

Concerns

  • Manpower shortages due to an unspecified 'war' situation impacted operations, potentially affecting Q1 FY26 placements.

  • Inventory buildup at March 31, 2025, though stated as strategic for the upcoming season, could be a concern if demand does not materialize as expected.

Key financials

2 periods

Q4 FY25

  • Revenue Growth
    32%
    YoY +32%
  • Gross Profit Margin
    51%
  • EBITDA Margin
    7.9%
  • PAT
    3.9%
  • Volume Growth
    40%
    YoY +40%

FY25

  • Revenue Growth
    2%
    YoY +2%
  • Gross Profit Margin
    32%
  • EBITDA Margin
    11.1%
  • PAT
    7%
  • ROCE
    18%
  • ROE
    13%
  • Volume Growth
    10%
    YoY +10%
  • Price Decline
    -8%
    YoY -8%

What they filed

Q1 FY27: revenue down 11.4%, net profit down 24.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue627 358 359 691 638 +2%385 +8%426 +19%612 −11%
EBITDA90 31 28 85 89 −1%27 −13%25 −11%68 −20%
Net profit61 17 14 58 59 −3%10 −41%12 −14%44 −24%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • B2C Sales (FY25)
    61% Share of Overall B2C Sales
  • B2C Sales (Q4 FY25)
    51% Share of Overall B2C Sales
  • B2B Sales (FY25)
    20% Share of Overall Sales
  • B2B Sales (Q4 FY25)
    27% Share of Overall Sales

Capital allocation

high confidence
  • Capex ₹100 Cr
    • Dahej plant investment ₹150 Cr
    • Sotanala plant initial spend ₹50 Cr
    • Sotanala plant additional investment (major part of FY26 capex) ₹100 Cr
    • Maintenance CAPEX across plants
    We had made an investment of about Rs. 150 crores in this plant. And now this plant has received the in-principle approval from the government, which means that in the month of June, we will start our production. The plant is going to commence in the production. So there will be lot of new products which will be started in this plant and there will be some expansion of the capacity because the new plant will be used majorly for manufacturing of insecticide, fungicide and their intermediate and the old facility we are going to enhance our capacity and some new of herbicides and their intermediates and also some new herbicides will be launched from the older plant which means that we are going to divide the herbicides and the insecticide area in totality in Dahej plant. In this fiscal because the enhancement in the power connection is also expected, which should come in another two months. So we come into production and this year this plant is going to contribute roughly about Rs. 100 crores this expansion with a CAGR of more than 50% in next 3 to 4 years because the expectation is very big and our hope from this new expansion is quite big and we'll be launching many new products and increasing our capacity for many products from this new expansion. Here I would also like to talk about our expansion budgets, which for this year we have kept at around Rs. 100 crores FY'26. A major investment is going to go to Sotanala, which is going to be a fully automatic plant. And it will boost the momentum. The most part of the Rs. 100 crore expenses is going to go to Sotanala. There will be some maintenance CAPEX which will be used across our plants. But yes, the major part will be this.
  • M&A Kaeros Acquisition · Integrated · Consideration ₹[object Object] (undisclosed)

    Acquired for product portfolio and expected profit contribution.

    Expected profit of Rs. 10-12 crores in FY26, with 100% recovery on acquisition cost.

    Kaeros has been positive in the first year itself. We have registered a profit of roughly about 2 crores. So in this fiscal, we can expect a profit of around Rs. 10 crores-Rs. 12 cores from this Kaeros business, but next year it will multiply. Once we go into the larger chunk of business, then it will multiply. But again, we had bought this company for 5 odd crores. So 6 crores maybe. We'll make a recovery in 100%.
  • Liquidity Liquidity disclosed Strategic inventory buildup at March 31, 2025, in anticipation of good monsoon predictions and new season demand, expected to be sold by June-July.
    Today I would also like to talk about the inventory because on 31st of March you would have seen the increase in inventory in the system. So that's the part of the strategic move because if we look at the current scenario, the monsoon predictions were quite good and the preparedness for the new season was quite needed. We had very aggressive launches in the year '25 and we have very aggressive launches in '26. There were a lot of new brands which are to be introduced into our market. We have to build up the inventory in the month of March, which will finish very soon by June-July.

Guidance & targets

Revenue

  • Dahej Plant Contribution Revenue · FY26 · High confidence ~Rs. 100 crores
    So we come into production and this year this plant is going to contribute roughly about Rs. 100 crores this expansion with a CAGR of more than 50% in next 3 to 4 years because the expectation is very big and our hope from this new expansion is quite big and we'll be launching many new products and increasing our capacity for many products from this new expansion.

    — Rajesh Kumar Aggarwal, Managing Director

Capacity

  • Dahej Plant Expansion CAGR Capacity · next 3 to 4 years · High confidence >50%
    So we come into production and this year this plant is going to contribute roughly about Rs. 100 crores this expansion with a CAGR of more than 50% in next 3 to 4 years because the expectation is very big and our hope from this new expansion is quite big and we'll be launching many new products and increasing our capacity for many products from this new expansion.

    — Rajesh Kumar Aggarwal, Managing Director

Profitability

  • Kaeros Profit Contribution Profitability · FY26 · High confidence Rs. 10-12 crores
    Kaeros has been positive in the first year itself. We have registered a profit of roughly about 2 crores. So in this fiscal, we can expect a profit of around Rs. 10 crores-Rs. 12 cores from this Kaeros business, but next year it will multiply.

    — Rajesh Kumar Aggarwal, Managing Director

  • Net Profit Margin Profitability · 2-3 years · Medium confidence 10%
    No, it's a difficult question for me to reply upfront. So, EBITDA levels we have already crossed 11.5. It will keep on improving. So when it will match the taxation, then we'll have it. I can say that this should be 2 to 3 years target.

    — Rajesh Kumar Aggarwal, Managing Director

Product Launches

  • New Product Launches Product Launches · FY26 · High confidence 6 products
    We are going to launch 6 products in FY'26 and all these are expected to launch soon.

    — Rajesh Kumar Aggarwal, Managing Director

Margin

  • EBITDA Margin Improvement Margin · 2-3 years · Medium confidence 200 to 300 bps
    But yes, in 2-3 years, definitely we will see 200 to 300 points change actually in the EBITDA levels. So that is going to be --

    — Rajesh Kumar Aggarwal, Managing Director

Headcount

  • Salary Budget CAGR Headcount · ongoing · High confidence 15%
    I would say that the routine is going to cover that. So routine changes in salary this year may be between about 15% plus. So which will cover the additional manpower required. In '26, again, when the Sotanala plant come in, then there might be some hike. So it will depend that we are yet to give the numbers that how much will be the sales gain and what all. But yes, I think we should be able to maintain with 15% CAGR on our salary budgets.

    — Rajesh Kumar Aggarwal, Managing Director

What to watch in Q1 FY26

Dahej Plant Production & Revenue

next quarter
Current In-principle approval received, production to start June 2025
Target Commencement of production and initial revenue contribution of ~Rs. 100 crores in FY26

Why it matters

Successful commissioning and revenue generation from the Dahej plant are crucial for FY26 growth targets.

And now this plant has received the in-principle approval from the government, which means that in the month of June, we will start our production. ... this year this plant is going to contribute roughly about Rs. 100 crores

Risks & concerns

  • Manpower shortages

    medium

    Manpower shortages due to an unspecified 'war' situation impacted operations, particularly in June, affecting production capacity.

    Management acknowledged

  • Potential for China dumping due to US tariffs

    low

    Analyst raised concern about US tariffs on China leading to dumping in India, but management stated it's less likely due to product registration requirements in India.

    Analyst downplayed

Q&A highlights

7 direct
Volume growth for Q4 and FY25 Direct
So, in the full year, the volume growth has been roughly about 10%. The average price decline during the year is around 8%. So, the total growth in terms of numbers is showing about 2%. ... Quarter I have not checked myself, but quarter slides we are showing a decrease of 32%. So, you can increase that so roughly volume growth will be around 40% odd.

Clarified the underlying volume growth for the quarter and full year, which was masked by price declines in FY25.

Asked by Bharat Gupta

Paddy Herbicide product (Altair) market size and complementarity with Green Label Direct
Yes, these are all complimentary products actually because this is a (inaudiable) as we said we immediately after I can add every type of solution at different price ranges because some of the generic solutions which we have are Rs. 300 to Rs. 400 per acre range-There are some specialty solutions that go up to Rs. 600-Rs. 700 per acre. ... So, at this moment, I am putting it in Maharatna. Next year, there may be a possibility of catching a focused maharatna.

Provided details on the strategic positioning and market potential of new paddy herbicide products, indicating a shift towards higher-value solutions and potential for Maharatna status.

Asked by Bharat Gupta

Inventory position and potential for price hikes due to shortages Partial
Yes, there is some price rise internationally also in the domestic market also, but not very big. But still, like I don't see that already some advantages people have started taking. But yes, if the shortage prevails, then there can be some price rise in the market. But we have to keep the fingers crossed for that.

Addressed the market dynamics of inventory and pricing, indicating potential for price increases if shortages persist, but also noting the cyclical nature of pricing.

Asked by Bharat Gupta

Kaeros acquisition progress and financial impact Direct
Kaeros has been positive in the first year itself. We have registered a profit of roughly about 2 crores. So in this fiscal, we can expect a profit of around Rs. 10 crores-Rs. 12 cores from this Kaeros business, but next year it will multiply. ... We'll make a recovery in 100%.

Confirmed the positive financial contribution from the Kaeros acquisition and provided specific profit guidance for FY26, indicating a full recovery of the acquisition cost.

Asked by Bharat Gupta

Confirmation of Dahej plant capex Direct
We are going to capitalize the Dahej plant because we have got the approval for Dahej plant and we have spent about Rs. 150 crores in Dahej. In the current fiscal, the Sotanala plant is a Rajasthan plant which we are making. So we have spent about Rs. 50 crores odd there already and there will be additional investment of about Rs. 100 crores in the new projects which will be majorly attributed to Sotanala now.

Clarified the allocation of the Rs. 150 crores capex to the Dahej plant and provided an update on the Sotanala plant's progress and future investment.

Asked by Arnav Sakhuja

Outlook on exports and capex for exports Direct
Exports generally don't need too much of CAPEX. It's a routine CAPEX which I am investing for the export market because for exports, you have to invest on generation of data. ... At the moment my contribution from the international market is coming to roughly about 5%. That will grow slowly. There is not going to be any dramatic change.

Provided clarity on the company's export strategy, emphasizing data generation over large capex, and setting realistic expectations for export growth from the current 5% contribution.

Asked by Kartik

Increase in other expenses Direct
So there is an increase of around Rs. 57 crore in the total of other expenses if you see and the major expenses has gone up to the business promotion and field promotion expenses. As we are a company, we are in the new product launches. So we have to work very hard with the farmers in the field. So for that you have to do some demonstrations also, you have to do show the product to the farmers, you have to show the IR. So those expenses have gone up.

Explained the significant increase in other expenses as primarily due to business promotion and field activities supporting new product launches.

Asked by Agastya Dave

Sustainability of Q4 revenue performance and future lumpiness Direct
Actually we don't form our strategy quarter wise, it was the pressure on the back of the mind that forced the Q4 and then the expectation from the new season was very good. And then we had set new solutions which were selling in this Q4. So these were the reasons which we say is going in Q4. ... So I am not saying that this is not repeatable. It should be repeatable in future.

Addressed the strong Q4 performance, attributing it to strategic moves and market conditions, and indicated that such performance is repeatable, suggesting a potential shift in quarterly seasonality.

Asked by Manish Jain

2 min read 7 chapters

Detailed narrative

Strong Industry Outlook and Monsoon Preparedness

The company noted a very positive sentiment across the industry, driven by good monsoon predictions and pre-monsoon showers. Crop sowing is expected to start early, with farmers experiencing good earnings from rabi season crops. This favorable environment, coupled with stable raw material prices, sets a positive outlook for fiscal 2026.

Record New Product Launches and Maharatna Strategy

Insecticides India launched a record 12 new products in FY25, with 4 of these successfully moving into the Focused Maharatna category, increasing the total to 16. These new products have received strong acceptance from farmers and trade, contributing to growth. The company plans to launch another 6 products in FY26, including 'Altair' from Nissan, a patented herbicide for rice.

Dahej Plant Commissioning and Capacity Expansion

The Dahej plant, following an investment of Rs. 150 crores, has received in-principle approval and is set to commence production in June 2025. This plant is expected to contribute approximately Rs. 100 crores to revenue in FY26 and is projected to achieve a CAGR of over 50% in the next 3-4 years. Additionally, Rs. 50 crores has been spent on the Sotanala plant, with another Rs. 100 crores planned for FY26, primarily for Sotanala.

Robust Financial Performance in Q4 and FY25

The company reported a strong Q4 FY25 with revenue growth of around 32% and volume growth of approximately 40%. For the full year FY25, gross profit margin improved by 655 bps to 32%, driven by a better product mix and improved pricing. EBITDA margin for FY25 increased by 281 bps to 11.1%, and PAT for FY25 stood at 7%. ROCE and ROE also improved to 18% and 13% respectively.

Strategic Inventory Management and Market Positioning

An increase in inventory at March 31, 2025, was a strategic move in anticipation of good monsoon predictions and the upcoming season. This inventory is expected to be sold by June-July. The company aims for double-digit growth, focusing on premium products and effective inventory control, positioning itself to outperform the market.

Kaeros Acquisition Delivering Expected Returns

The acquisition of Kaeros for approximately Rs. 5-6 crores has been positive, generating about Rs. 2 crores in profit in its first year. The company expects Kaeros to contribute Rs. 10-12 crores in profit in FY26, indicating a 100% recovery of the acquisition cost and significant future growth potential as it scales up.

Manpower Challenges and Operational Adjustments

The company faced manpower shortages due to an unspecified 'war' situation, which impacted operations, particularly in June. While this posed a challenge to achieving 100% of desired output, management is working to mitigate the impact and expects recovery. Other expenses increased by Rs. 57 crores, primarily due to aggressive business promotion and field activities for new product launches.

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