India Pesticides Limited, in-depth analysis of IPLQ1 financial report: insights into investment opportunities in the chemical industry

1. performance highlights: the strategic logic behind strong growth

as one of the fastest growing agrochemical technology manufacturers in India, India Pesticides Limited Limited (IPL) has performed brilliance in the first quarter of 2025. From the financial data, the company has achieved a full range of growth breakthroughs:

analysis of core financial indicators:

• net profit reached Rs 3.5 billion, up 79.2 per cent from Rs 1.9 billion in the same period last year, showing a significant improvement in the company's profitability.
• Net profit after tax (PAT) was Rs 2.2 billion with a net profit margin of 12.3 per cent, reflecting the company's outstanding performance in cost control and operational efficiency.
• Operating income reached Rs 28.2 billion crore, up 25.8 per cent YoY and 33.9 per cent QoQ, well above the industry average

this growth was driven by two main dimensions: sales growth of 16% and price improvement of 8%. This pattern of "rising volume and price" is particularly rare in the context of the current weak demand in the chemical industry, which reflects IPL's competitive advantage in product differentiation and market positioning.

Profitability improved significantly: EBITDA margin expanded by 417 basis points year-on-year, up 176 basis points to 18.4 percent quarter-on-quarter, an excellent level in the agrochemical industry. The substantial improvement in margins was mainly due to the price recovery of herbicides and intermediates, as well as higher operating leverage.

2. Industrial Layout: Deep Practice of Vertical Integration Strategy

IPL's business structure shows obvious professional characteristics, with technical raw drugs (Technical) and raw materials (API) business contributing 71% of total revenue, which reflects the company's strong position in the upper reaches of the value chain.

strategic significance of capacity expansion: the company completed a major expansion of PEDA intermediate production capacity in the quarter, from 2000 tons to 6000 tons per year, with an investment of 2.95 billion crore, entirely through internal capital accumulation. What is more noteworthy is that the company plans to further expand its production capacity to 8500 tons per year in the second quarter of fiscal year 2026.

The underlying logic of this expansion plan lies in:

1. extending the industrial chain upstream: PEDA is a key intermediate in the production of the original drug of Prochlor (Pretilachlor), which achieves a safe supply of key raw materials through self-production.
2. Enhanced Cost Control Capability: Reduce dependence on external suppliers, improve bargaining power and profit margins.
3. Responsive policy orientation: In line with India's 'Self-reliance' (Aatma Nirbhar Bharat) initiative, with policy support

preparation business synchronous development: the company also completed the expansion of the preparation plant, adding 3500 tons of production capacity. This move shows that IPL is building a complete industrial chain from intermediates to original drugs to preparations, realizing a strategic layout of vertical integration.

3. market outlook: multiple positive factors converge

from the perspective of the macro environment, the market environment facing IPL is improving, and a number of positive factors provide support for the company's future development:

good demand side:

1. good monsoon forecast strong monsoon forecast creates favorable conditions for agricultural production, directly driving the growth of pesticide demand.
2. Export market recovery the global agrochemical market is gradually coming out of the trough, creating opportunities for Indian pesticide companies to export.
3. Stable cost of raw materials: Upstream chemical raw material prices tend to stabilize, help control production costs

product portfolio optimization: IPL's leading position in the field of rice herbicides provides a stable income base. As a major producer of top rice herbicides and their key intermediates in India, the company has a significant competitive advantage in this market segment.

Technology innovation to promote: the company continues to invest in research and development, expand its high-end product portfolio, and achieve value enhancement through product upgrades. This strategy is particularly important in the context of the current industry homogenization competition.