Accumulate Bayer Cropscience; target of Rs 4517: Prabhudas Lilladher
Prabhudas Lilladher’s research report on Bayer Cropscience
BYRCS reported strong results with ~30% topline growth defying industry slowdown. The numbers were better than our estimates and there was visible improvement on all key parameters. According to the management, strong performance in Paddy, Fruits and Vegetables were the key drivers of growth for the company. BYRCS is a compelling play in the Indian Crop protection space given 1) broad based product portfolio (Insecticides/ Fungicides/ Herbicides are 47%, 27% and 18% of revenues) 2) 14% market share (86% domestic sales) 3) aggressive new launch pipeline (50 new products by 2022) 4) most extensive and professionally planned distribution network and 5) Rs1.2bn synergy benefits from Monsanto Merger. we estimate that MCHM merger will be EPS accretive by 30% for BYRCS shareholders (7% dilutive for MCHM shareholders).
We estimate 18.5% PAT CAGR over FY18-21 and expect premium valuations to sustain given strong parentage and growth visibility. Maintain Accumulate with a target price of Rs4517 based on 35x FY21 earnings.
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