Best Agrolife Ltd (BAL) (BSE: BESTAGRO 539660) is listed among India's top 15 agrochemical companies. It is a research-based company focused on bringing world-class and cost-effective novel agrochemical formulations for the agricultural industry to improve crop productivity. The company is actively pursuing a growth strategy to gain a 20% market share in the medium and long term. At the same time, BAL is targeting a 25-30% revenue growth by increasing the percentage of the Formulation Business and B2C segment.
What is the segment-wise growth strategy pursued by BAL management?
The Best Agro management is focused on farmer-centric sustainable growth by offering research-driven unique solutions. At the same time, we have developed building blocks that define a growth path in its branded business and B2C business at a higher pace. The company is confident of delivering 25-30% growth in revenue by increasing the share of the Formulation Business and B2C segment. This will also ensure consistency in healthy EBITDA delivery, offering a better return on equity. Further, we are spreading our footholds in the overseas markets in FY 23-24 to replicate our domestic success story with selective offerings, ensuring sustainable and healthy profit margins.
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What are the medium to long-term targets of the company?
The company’s medium to long-term target is to gain 15-20% market share in each patented/branded product segment. The company is also investing in enhancing its manufacturing capabilities through ‘brown field’ and ‘green field’ capex plans in the short and long term. This move would help build the company’s manufacturing capabilities, create backward integration in its manufacturing process, and improvise gross margin and working capital management.
How does the company view the future of its sector?
BAL believes that the future of the agrochemical sector is highly promising. The company’s view is derived from the country’s population growth, which will drive global food demand, leading to a boost for agrochemicals. On the other hand, the factors such as declining cultivable lands and sluggish yields are forcing the growers to adopt appropriate agrochemicals to improve yields. India’s population, about 18% of the global population, drives domestic demand for agricultural products. Countries such as India, Japan, and China contribute to the APAC market share due to their higher demand for agricultural yields, which gives a promising outlook for agrochemical demand. Besides, Indian manufacturers contribute significantly to reducing crop damage by providing indigenous plant protection products at very reasonable prices, to which BAL contributes significantly. Therefore, the sector holistically has a bright future leading to a positive outlook for BAL.
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What government policies can help boost the sector’s growth and benefit the company’s growth?
At BAL, we believe that schemes such as ‘Make in India’, and production-linked incentives (PLI) will boost domestic production, leading to the sector’s and the company’s growth. Additionally, steps such as simplification of the export registration process, reducing trade barriers, and improving focus on bilateral trade agreements to enhance revenue generation through exports, will bring long-term benefits to the sector and the company.
