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India Pesticides Limited’s (IPL) overall IPO was subscribed by more than 1.64 times as on 10:30 am of day 2, receiving very good response from retail investors. Retail individual category was subscribed by more than 3.18 times. As of now Qualified Institutional and Non-Institution categories have not shown much of interest but we expect both the categories to receive good response at the end of the IPO on 3^rd day. If we look at the grey market premium of IPL IPO, the same was volatile since the last 2-3 trading days and it is now trading at around premium of 20-30%.

Fundamentals and valuations of the stock looks good and FY-2021 PE of 24.5x and EV/EBITDA of 18.2x at upper band of the IPO price, are slightly better than the peers companies. Similarly, company has one of the best ROE & ROCE of 34% and 45% respectively. Company has a healthy balance sheet with negative Net Debt to Equity. We expect the upcoming expansion plan and higher capacity utilisation will be the growth drivers for the company in future. We are assigning a “Subscribe” recommendation to the issue.

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