Saturday, September 6, 2014
Agrochemical sector is one which re rated sharply in this bull run. Market leaders like United Phosphorous ,Excel Cropcare ..etc hitting new highs every day . The per capita consumption of pesticides in India is just 475 gms per hectare as compared to 11800 gms per hectare in Japan and 3000 gms per hectare in USA.Indian pesticides market is expected to touch $5 billion by 2017.This is offering good growth potential for companies in this sector.In addition to this opportunity in local market,tightening of pollution related norms in foreign countries increasing export potential too. Aimco Pesticides is relatively an unknown player in this sector.This company jointly owned by Pradeep Dawe and family and one of market leader in this sector- Excel Cropcare.Excel owns more than 25 % stake in this company which they acquired earlier at a cost of Rs.24.50 per share .
This Mumbai based company is an early entrant in this sector and present in all major product categories including Insecticides,Herbicides,Fungicides and Plant growth regulators.Company’s R&D facilities are approved by DST and Aimco is also a government recognised export house.Even if it is a pioneer in this sector, its financial performance was poor till recently. Company’s sizable debt was a big issue , but recently it entered into a one time settlement with its bankers and retired substantial portion of its debt . Now its debt is very negligible.Company also succeeded in registering few new products in overseas markets. Company currently earning 25-30 % income from export markets and it is expected to increase further.Company also planning to introduce few more new molecules.
Management seems paying renewed interest to revive this company in recent times. As a result , company reported substantial improvement in latest June quarter. Company reported profit after a long gap with a top line of Rs.47 Cr and a net profit of Rs.1.5 Cr in this quarter.It can be considered only as an early indication of changing trend and one should wait and watch the continuity of the same going forward.But promoters increasing confidence is a factor to read along with this improvement. For the past many months they are aggressively hiking stake through open market purchases. ( Check promoter purchase details HERE)
Aimco’s stock price gained in recent months due to various factors like improving financials ,over all sector re-rating and aggressive promoter buying .Promoters bought shares up to Rs.35 level.When we look into a stock which appreciated substantially in recent times, it is not prudent to take similar strategy for investor’s with different risk level. Investor’s with low to average risk level may wait for a correction of 20 % for a fresh entry (though I am not sure whether it will really happen when promoters are purchasing aggressively ) and high risk investor’s can take some exposure even at current level.Stock trading only in BSE .
Posted by VALUEPICK at 9:31 AM