A) Brief Overview About the Indofil

1. Company Overview:

Indofil Industries Limited (Indofil) has a legacy of more than six decades as a diverse, equitable, and inclusive enterprise. The company operates in three primary segments: Agriculture Chemicals (ABD), Speciality Chemicals and Indofil Innovative Solutions (IIS). Indofil is committed to enhancing the well-being of farmers, both domestically and globally, and aims to become a global leader in growth driven by customer success.

2. Product Offerings:

Indofil offers a wide range of high-quality products such as: Fungicides , Herbicides , Insecticides , Acaricides , Surfactants and Bio-stimulants These products are tailored to meet the diverse needs of domestic and international markets.

3. Market Reach and Distribution:

The company's robust distribution network allows it to cater to both large enterprises and individual farmers across the globe. Indofil is a reputed supplier of Mancozeb and Zineb Technical and their formulations.

4. Sector Diversification:

Apart from agriculture, Indofil also supplies innovative speciality chemicals to various industries, including: Leather, Textile , Plastic , Construction

5. Manufacturing Facilities:

Indofil’s manufacturing facilities are located in Gujarat, India. These facilities utilize automated manufacturing processes with advanced equipment and machinery to exceed industry standards. The company has also adopted backward integration to procure key raw materials, reducing its dependency on external markets.

6. Research and Development:

(R&D) and Innovation Indofil has been at the forefront of innovation, supported by its robust R&D facilities. The company makes strategic investments in technology and human capital to stay ahead of competitors.

It employs cutting-edge technology for the manufacturing of agro-technical products, including: Cymoxanil, Dodine , Metalaxyl , Propiconazole , Tricyclazole , Thifluzamide, Metalaxyl-M , Propargite , Picoxystrobin The company develops both solo and mixture formulations using these products.

22 patents are granted. 17 India and 5 International. And Total, 37 patents filed.

7. Advanced Technology Integration

Indofil integrates advanced technologies in its operations to enhance its market presence and remain competitive in both the domestic and international markets. This structure provides a clear, organized view of Indofil's operations, product offerings, and strengths, which can be easily used in presentations, reports, or other professional documents

B) Revenue Contribution of Indofil Pre-IPO Share

C) Export Market for Indofil Pre-IPO Share

1. Brazil -The largest market globally, and for Indofil, is driven by vast cultivable land and high agrochemical consumption. This market, especially for protective fungicides and Mancozeb, holds significant importance for Indofil. By investing in new product registrations, they foresee strong revenue growth. After a soft launch of one product, Indofil plans a second launch in FY 24-25, positioning Indofil as a leader in the fungicide sector. The Brazil subsidiary is now the largest contributor to international business, and Indofil aims to aggressively grow B2C strategy to become a major player in this critical market.

2. Europe : Like in Brazil, they are investing in new product registrations in Europe and expect to see significant sales growth starting next year. The Netherlands subsidiary contributes through long-term corporate partnerships, while the Italian subsidiary, Agrowin Biosciences SRL, is performing well and planning future growth by expanding its product range.

3. Philippines:It plays a pivotal role in driving growth within the Asia region. The subsidiary has successfully diversified its product portfolio, with a substantial percentage of sales now generated through traded products. With a strategic focus on further portfolio expansion, Indofil Philippines is poised for significant growth in the coming years, aiming to establish itself as a major player in the local agrochemical market. Additionally, Indofil Philippines is a key supplier to plantation companies, contributing to the country's agricultural export success. This strong market presence positions the company for continued expansion and increased market share in the Philippines.

4. Bangladesh:Indofil have successfully regained the market share in Bangladesh, despite the challenging and competitive environment. With the newly adopted strategy focusing on a balanced approach towards B2B and a robust B2C presence, they are continuously enhancing the quality of the business in Bangladesh.

D) Industry Analysis for Agro-Chemicals and Speciality Chemicals Global Agrochemical Industry

1. The agrochemical industry plays a critical role in agriculture, improving crop yields and protecting against pests and diseases. The market includes herbicides, insecticides, fungicides, and chemicals for soil fertility and plant growth.
   
   
2. In 2023, the industry reachedUSD 225.79 billion, with the Asia Pacific region showing significant growth.
   
   
3. The global agrochemical market is expected to reach USD 282.28 billion by 2028, driven by rising demand for food and increasing awareness of crop protection. Indian Agrochemical Industry.
   
   
4. India is the fourth-largest producer of agrochemicals globally, with a robust manufacturing base and competitive labor and manufacturing costs. The industry is expected to grow at a CAGR of 10.17% from 2023 to 2028, reaching USD 12.90 billion. Erratic weather patterns pose challenges, but strong government support and demand for agrochemicals fuel growth. Indian Agrochemical Export.
   
   
5. India is a major exporter of agrochemical products, second only to the USA. Technological advancements have increased export volumes in recent years, driven by strong demand from international markets. Growth Factors in the Indian Agrochemical Industry.
   
   
6. A growing population and increasing reliance on agriculture. Favorable government schemes like PM-KMY and PMFBY support farmers financially. The industry is adapting to climate change and rising demand for eco-friendly products.
   
   
7. Challenges in the Agrochemical Industry
   
   a) Farmers' lack of proper training,
   b) A shift towards organic products may slow the growth of traditional agrochemicals. c)Environmental concerns, such as soil degradation and water contamination. Global Specialty Chemicals Industry
   
   
8. The specialty chemicals industry is rapidly growing, valued at USD 869.88 billion in 2023, with applications across agriculture, textiles, cosmetics, and automotive sectors. The Asia-Pacific region leads this market, expected to reach USD 937.28 billion by 2028.
   
   
9. Indian Specialty Chemicals Market

a) Contributing about 20% to India’s chemical market, the specialty chemicals sector is seeing growth due to strategies like China+1, which diversifies operations from China.

b) The market is expected to reach USD 60 billion by 2026. Opportunities for Growth in the Indian Specialty Chemical Market

c)Government initiatives providing subsidies and tax incentives.

d) Growth in the agrochemical and pharmaceutical sectors will drive sales.

e)Public and private sector collaboration and research investment.

E) Fy24 Financials Performance of Indofil Unlisted Share

1. Revenue increased marginally from INR 3,095 Cr in FY23 to INR 3,118 Cr in FY24, reflecting a growth of just 1%. Despite an 18% volume growth, the fall in product prices limited revenue expansion. The international business experienced a robust 38% volume growth, with Brazil, Indofil’s largest market, showing an impressive 65% growth.The company also introduced three new products in the European market, which are expected to contribute to revenue growth in the coming years.

2. Gross margins improved from 37% in FY23 to 42% in FY24,driven by a softening in raw material prices, enhancing profitability.

3. Profit After Tax (PAT)rose significantly by 45%, increasing from INR 241 Cr in FY23 to INR 332 Cr in FY24, mainly due to the reduction in raw material costs.

4.In FY24, Indofil generated an operational cash flow of INR 426 Cr, a substantial turnaround from the negative INR 67 Cr in FY23. The company undertook a total capex of INR 67 Cr and made non-current asset purchases amounting to INR 25 Cr. With the surplus cash from operations, Indofil repaid INR 200 Cr of debt, paid INR 39 Cr in interest, and distributed INR 27 Cr in dividends. By the end of the fiscal year, the company had generated INR 217 Cr in cash from its business operations.

5. The Return on Equity (ROE) for FY24 stood at 8.5%, with Earnings Per Share (EPS) of INR 155.

F) Valuation of Indofil Unlisted Shares

Currently, in the unlisted market, Indofil is available at INR 1,375 per share, with a market capitalization of INR 3,100 Cr and a P/E ratio of 10x.

In comparison, Rallis India, a listed company and part of the Tata Group with a legacy spanning over 150 years, is trading at a P/E of 47x. Rallis India operates across the agrochemical value chain, offering products ranging from seeds to organic plant growth nutrients.

Bharat Rasayan Ltd, another player in the agrochemical sector, is trading at a P/E of 37x. The company specialises in the manufacturing of Technical Grade Pesticides and Intermediates used in the agrochemical industry.

Looking at the top listed 10 players in the agrochemical industry, the median P/E ratio is above 40, highlighting Indofil Is comparatively low valuation in the unlisted market

Indofil's current valuation in the unlisted market is being affected by two primary factors:

1. Ongoing Legal Disputes:The unresolved legal battle between Bina Modi (Chairperson and Managing Director) and her sons, Lalit and Samir Modi, over the division of family assets, including Indofil, Godfrey Phillips, and Modi Mills, has created instability. Investors are wary of this internal conflict, as it impacts the governance and strategic direction of the companies involved. The lack of clarity around control and ownership further dampens investor confidence.

2. No IPO Expectations: A major exit route for investors in the unlisted market is through an IPO, but with no foreseeable IPO plans for Indofil, investors are hesitant. The absence of an upcoming IPO limits liquidity and makes it difficult for investors to exit, which further suppresses demand and, consequently, the company's valuation. These two factors together contribute to why Indofil is not achieving the higher valuations seen by its peers in the agrochemical industry.