This Crop Protection Stock Can Give 32% Returns, Here's Why Investors Can Buy

Broking firm Anand Rathi has recommended buying the stock of crop protection chemical manufacturer Heranba Industries Ltd.

Target price of Rs 800 on the stock of Heranba Industries

Current market price	Target price	Gains %
Rs 681	Rs 900	32.00%

The firm has set a price target of Rs 900 on the stock, which implies a near 32% gains from the current levels.

According to Anand Rathhi, the company is a crop protection chemical manufacturer, exporter and marketing company based out of Vapi, Gujarat, with Corporate and Administration Offices in Mumbai. It manufactures Intermediates, Technicals and Formulations & is one of the leading domestic producers of synthetic pyrethroids.

Its Pesticides range includes insecticides, herbicides, fungicides and public health products for pest control. The company's business mix include: Domestic Institutional sales of Technicals (27%), Technicals Exports (43%), Domestic Formulations (19%) and Formulations Exports (11%).

Good quarterly numbers

Heranba Industries reported good set of numbers for the quarter under review with revenue increase of 18.9% year-on-year to Rs.3,953 million on standalone basis. The company witnessed uptick in its domestic revenues this quarter, domestic revenues formed 70% of total revenue from operations.

On profitability front, the EBITDA from operations for the quarter increased by 10.7% year-on-year at Rs.710 million with an operating margin of 18.0%. The company achieved the reported PAT of Rs.535 million, an increase of 19.6% year-on-year with a net margin of 13.5% translating into EPS of Rs.13.37 per share for the quarter.

Expansion to see better performance

According to Anand Rathi, the company's construction work for its Sarigam expansion is ongoing and will soon reap the benefits of the same. The company intends to capitalize on opportunities generated by various technicals going off patent in the coming years by manufacturing and supplying generic variants of the technicals, in the highest regulated markets of the United States of America and Europe.

"We are positive on Heranba Industries Ltd, the company has diverse product range, strong margins, strong balance sheet, and further opportunities from off patent products in highly regulated markets. We revise our rating to BUY on the stock with a target price of Rs.900 per share," the brokerage has said.

The stock of Heranba Industries was last trading at Rs 681 on the NSE.

Disclaimer

The above stock of taken from the brokerage report of Anand Rathi. Investing in stocks is risky and investors must consider the risk. The author, Greynium Information Technologies Pvt Ltd and the brokerage firm Anand Rathi should not be held responsible for any losses based on the above article. Markets are increasingly volatile and hence further caution is advised.