India Pesticides Limited — Q4 FY25 earnings call

Call held 28 May 2025

Management summary

India Pesticides delivered a strong Q4 and FY25, with significant revenue and EBITDA growth driven by strategic initiatives, capacity expansion, and new product registrations. While facing temporary pricing pressures and increased debt from short-term borrowings, the company is optimistic about future growth, targeting INR 1,000 crore revenue and 18-20% EBITDA margin for FY26, supported by internal accruals and a debt-free commitment.

Highlights

  • FY25 Revenue of INR 844 crore, up 21.3% YoY, demonstrating robust growth amidst a dynamic global environment.

  • FY25 EBITDA increased 32% to INR 134 crore, with EBITDA margin at 16%, driven by strategic clarity and effective execution.

  • Q4 FY25 Revenue surged 62% YoY to INR 211 crore, and EBITDA jumped 373% to INR 35 crore, indicating strong quarterly recovery.

  • PAT margin expanded 950 bps to 10% in Q4 FY25, reflecting improved operating leverage and price stability.

  • Formulations business grew over 20% compounded, and Pretilachlor is expected to grow 20% compounded over the next 2-3 years, highlighting strong product-specific momentum.

Concerns

  • Temporary pricing pressure was observed in the agrochemical industry, though prices are now stabilizing.

  • Debt increased from INR 18 crore in FY24 to INR 52 crore in FY25 due to short-term borrowings, though management expects normalization.

  • Operating cash flow was significantly low at INR 2 crore in FY25, attributed to increased debtor levels and strategic inventory buildup.

Key financials

  1. Revenue ₹844 Cr +21.3%YoY
  2. EBITDA ₹134 Cr +32%YoY
  3. EBITDA Margin 16%
  4. Net Profit ₹82 Cr +37%YoY
  5. PAT Margin 9.7%
  6. Export Revenue ₹315 Cr +17.1%YoY
  7. Domestic Revenue ₹513 Cr +25.1%YoY

What they filed

Q1 FY27: revenue down 8.4%, net profit down 34.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue229 172 207 275 290 +27%225 +31%266 +29%252 −8%
EBITDA34 27 32 45 49 +44%38 +41%42 +31%35 −22%
Net profit26 16 22 35 32 +23%23 +44%31 +41%23 −34%
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

Share of Revenue
₹829 Cr Total
  • Technicals (FY25) ₹549 Cr 66.2%
  • Formulations (FY25) ₹280 Cr 33.8%

Capital allocation

high confidence
  • Capex ₹116 Cr internal accruals
    • Existing facility ₹52 Cr
    • Shalvis Specialities Limited ₹64 Cr
    • Sandila site expansion, boiler, complex for intermediate/technical product ₹52 Cr
    Our dedication to research and development continues. We have targeted a capex of over INR 200 crore over 2 years with planned capital expenditures of INR 52 crore at our existing facility and INR 64 crore at Shalvis Specialities Limited. In FY 2025-'26, while the remaining over next year, importantly, we remain firmly committed to our principle of maintaining a debt free position, funding all expansions and investment from internal accruals.
  • Debt Gross ₹52 Cr
    Company's total debt increased from INR 18 crore in FY '24 to INR 52 crore in FY '25, primarily due to increase in short-term borrowings, which will be normalized soon.
  • Liquidity Liquidity disclosed Committed to maintaining a debt-free position, funding all expansions and investment from internal accruals.
    In FY 2025-'26, while the remaining over next year, importantly, we remain firmly committed to our principle of maintaining a debt free position, funding all expansions and investment from internal accruals.

Guidance & targets

Revenue

  • Revenue Target Revenue · next fiscal year (FY26) · High confidence INR 1,000 crores
    Our revenue target for the next fiscal year is INR 1,000 crores with continued emphasis on maintaining or improving EBITDA margins.

    — Anand Swarup Agarwal

  • Revenue Growth Revenue · next 2 to 3 years · Medium confidence 15% to 20%
    It is too early to project some growth for '27, but it will be definitely what we are seeing is good growth for agrochemical and especially from India. So we are projecting 15% to 20% revenue growth in near next 2 to 3 years.

    — D. K. Jain

Margin

  • EBITDA Margin Margin · next fiscal year (FY26) · High confidence 18% and 20%

    From 16% today

    We are expecting our EBITDA margins to improve from current 16% to between 18% and 20% as we are committed to increasing profitability.

    — Anand Swarup Agarwal

Product Growth

  • Pretilachlor Growth Product Growth · next 2 to 3 years · High confidence 20% compounded
    We have increased capacity of this product significantly and in the process of further increasing this capacity. So, we see significant jumps at 20% compounded in next 2 to 3 years from this molecule.

    — S. P. Gupta

  • Formulations Business Growth Product Growth · this year · High confidence >20% compounded
    Our Formulations business is growing, say, more than 20% compounded. In this current year, we have also exported bulk formulation, which was very small earlier. So, say, earlier, say, it was around INR 10 crore to INR 12 crore by '24, but it has increased to around INR 50 crore. Bulk formulation has increased to INR 50 crore. So main growth has come from bulk formulation side. Of course, our B2C business is also growing. ... Yes. [in response to 'And you expect this 20% growth maintained in this year?']

    — S. P. Gupta

Working Capital

  • Normalized Working Capital Days Working Capital · going forward · High confidence around 220 days

    From around 250 days today

    Last quarter, it was around 250 days. So, our normalized working capital should be around 220 days going forward.

    — S. P. Gupta

Capacity Utilization

  • Sandila Unit Peak Revenue Capacity Utilization · Medium confidence around INR 1,100 crore
    Peak revenue, it will be around, I think, INR 1,100 crore we can easily move from Sandila only.

    — S. P. Gupta

What to watch in Q1 FY26

Shalvis Specialities Limited commercial operations

Next quarter
Current Progressing well, under construction
Target Commercial operations started

Why it matters

Shalvis is a key capex project, and its commercialization will contribute to future revenue and profitability.

It will start contributing from next quarter only. We will be building the Shalvis in small blocks and it starts with contributing step by step.

Risks & concerns

  • Temporary pricing pressure in agrochemical industry

    medium

    Temporary pricing pressure was observed, though recent quarters show signs of stabilization.

    Management acknowledged

  • Low operating cash flow due to increased debtor days and strategic inventory buildup

    medium

    Operating cash flow was INR 2 crore in FY25 due to delayed customer remittances and a strategic decision to hold higher inventory for seasonal demand.

    Management acknowledged

  • Fluctuating export demand due to geographical and weather conditions

    medium

    Export demand is difficult to predict as geographical and weather conditions are constantly changing, leading to demand fluctuations across regions.

    Management acknowledged

  • Increased debt due to short-term borrowings

    low

    Debt increased from INR 18 crore in FY24 to INR 52 crore in FY25, but management expects it to be normalized soon.

    Management acknowledged

Q&A highlights

6 direct
Impact of early monsoon and raw material prices on demand and margins Direct
With the early monsoon, we feel that the pick-up of the agrochemicals would be little earlier. So there has to be a good demand for agrochemicals, especially during sowing, the herbicide requirement will certainly increase. ... raw material prices are getting stabilized and they are more or less stable now.

Addresses immediate demand outlook and cost stability, crucial for margin and operational planning.

Asked by Shreya Jain

Pretilachlor growth outlook and impact of antidumping duty Partial
We have increased capacity of this product significantly and in the process of further increasing this capacity. So, we see significant jumps at 20% compounded in next 2 to 3 years from this molecule. ... If the antidumping duty gets notified, can we see significant jump in this product? ... Volume wise, there will not be much different, but prices will be slightly higher. So, the revenue will be increased proportionately.

Pretilachlor is a key product; its growth trajectory and potential price increase from antidumping duty are significant for future revenue.

Asked by Ankit Gupta

Driving forces for FY26 revenue and margin growth targets Direct
We are expecting growth on two aspects. Number one is that the capacity utilization of our existing products will increase. And number two, we are adding new products also in our product portfolio. ... And the margin increase, what we are expecting that we are continuously working on the process innovations. We are trying to optimize the overall production cost as well as manufacturing cost and conversion.

Provides clarity on the strategic levers for achieving ambitious FY26 targets amidst industry challenges.

Asked by Dhwanil Desai

Low operating cash flow and working capital management Direct
The major reason for reduced cash flow is increase in our debtor's level. So, our receivables days has gone up because some of our big buyers who were supposed to remit payment in March, they remitted in April. ... Secondly, now we have to keep higher inventory at our end since our MNC customers, they do not want to keep higher inventory with them.

Explains a key financial metric deviation and outlines steps for improvement, impacting liquidity and efficiency.

Asked by Bharat Gulati

Scale of operations and growth in regulated markets (EU/US registrations) Direct
Yes. There are two products, what we got registration in the U.S. For one, we have already started getting orders and we have already started supplying part of it as we already supplied this month and remaining supplies we would be doing next month. ... This our effort for registration of our molecules is a continuous activity.

Highlights successful market diversification and future growth avenues in higher-value regulated markets, indicating new revenue streams.

Asked by Dhwanil Desai

Potential to achieve higher EBITDA margins (22-25%) seen in earlier times Partial
Sir, we it will be our effort and continuous effort what we are making to increase the total overall market margin levels to the earlier one about 25%. And we feel that we should be able to do that in few years of time by backward integrating the products, by optimizing the operating conditions, then by selecting products with slightly higher margin levels. ... But that depends again on the market conditions.

Addresses a long-term aspiration for margin expansion, but also highlights the external dependencies and challenges.

Asked by Dhwanil Desai

Capacity to exceed INR 1,000 crore revenue target for FY26 Direct
No, we have the capacity because even our present capacity utilization is about 61%. So obviously, we have got some scope in that. So, we are trying to utilize this capacity. Plus, we are trying to add 1 or 2 more production blocks because we want to make some new another product. ... So that way, we should be able to get this revenue what we have projected. We are quite optimistic about this.

Reassures investors about the company's operational readiness to meet and potentially surpass its revenue guidance.

Asked by Manish Jain

Domestic vs. Export margins and normalized working capital days Direct
Our prices for domestic and export, they are at on par only. So, I think it will be within very tight range, will be minor there, say, point 5% here and there. ... Last quarter, it was around 250 days. So, our normalized working capital should be around 220 days going forward.

Clarifies margin dynamics across geographies and provides a specific target for working capital efficiency, impacting liquidity.

Asked by Ankur Kumar

2 min read 6 chapters

Detailed narrative

Robust FY25 Performance and Strategic Growth Drivers

India Pesticides reported a strong FY25 with revenue growing 21.3% YoY to INR 844 crore and EBITDA increasing 32% to INR 134 crore, achieving a 16% margin. This performance was driven by strategic clarity, effective execution, and a differentiated product portfolio. Management highlighted increased capacity utilization, new product introductions, and backward integration as key drivers for future growth, aiming for INR 1,000 crore revenue and 18-20% EBITDA margin in FY26.

Capacity Expansion and Debt-Free Commitment

The company has planned a capex of INR 116 crore for FY26, with over INR 200 crore projected over two years, focusing on existing facilities and Shalvis Specialities Limited. This includes INR 52 crore for the existing facility and INR 64 crore for Shalvis, along with investments in a boiler and new production complexes at Sandila. Despite these investments, IPL remains committed to maintaining a debt-free position, funding all expansions through internal accruals.

Formulations and Pretilachlor as Key Growth Engines

The formulations business demonstrated strong growth, exceeding 20% compounded, with bulk formulation exports increasing significantly from INR 10-12 crore to INR 50 crore. Pretilachlor, a major rice herbicide, is expected to see significant jumps with 20% compounded growth over the next 2-3 years, driven by increased capacity. The company anticipates over INR 100 crore in sales from Pretilachlor in FY25, with its 8,500-ton capacity potentially generating over INR 300 crore.

Market Diversification and Regulated Market Penetration

IPL is broadening its market reach, establishing a stronger presence in over 25 regulated markets. In FY25, the company secured 4 technical and 19 formulation registrations in India, along with 4 registrations in EU/UK and 2 in USA, plus 2 formulation registrations in Australia. Commercial supplies for one US-registered product have already begun, with orders expected for another soon, reinforcing IPL's position as a reliable global partner.

Working Capital and Cash Flow Management

Operating cash flow for FY25 was significantly low at INR 2 crore, primarily due to an increase in debtor levels as some large buyers remitted payments in April instead of March. Additionally, IPL strategically increased inventory to cater to MNC customers with shorter order cycles and avoid losing seasonal demand. Management expects working capital days to normalize from ~250 days to ~220 days in the coming quarters.

Raw Material Stability and Margin Improvement Outlook

After a period of drastic price reductions in the previous year, raw material prices are now stabilizing, contributing to margin expansion. Management attributes the projected improvement in EBITDA margins from 16% to 18-20% in FY26 to operating leverage, the introduction of new products, and backward integration initiatives. They also noted that domestic and export margins are largely on par, with minor differences related to imported raw material duties.

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