Aries Agro Ltd.

Aries Agro Ltd.

Company Overview

Aries Agro Ltd (Aries Agro) is an agriculture chemicals manufacturer. The company manufactures nutrients sulphur, magnesium, calcium, water-soluble, nitrogen (N), phosphorous (P) and potassium (K) nutritional products for plants and animals. Its products are chelated micronutrient fertilizers, farm equipment, major fertilizers, multi-micronutrient fertilizers, agriculture products, nutritional products, plant nutrition, plant protection, and veterinary products. Aries Agro’s nutritional products include aries total, calbor, marino, zincomix, ferromix, sulfonite, and tetrabor. The company markets products under brand name, AGROMIN. It also offers in-house research and development to develop bactericides for agriculture. Aries Agro is headquartered in Mumbai, Maharashtra, India.

In addition, it provides veterinary products comprising protein and mineral feed supplements for poultry, cattle, and broilers; and herbal milk booster for dairy cattle, as well as offers seeds, farm equipment, machinery, etc. The company also sells its products to Sri Lanka, Bangladesh, Pakistan, Ecuador, Brazil, the United States, Taiwan, Kenya, Vietnam, Australia, and New Zealand. AAL has 6 plants in India and two in AAL subsidiaries in UAE. The plants are presently located at Bangalore, Mumbai, Hyderabad, Kolkata, Gujarat, Lucknow, Sharjah, UAE (Subsidiary Company) and Fujairah, UAE (Subsidiary Company).

AAL has five subsidiaries viz Aries Agro Care Pvt Limited, Aries Agro Equipments Private Limited, Aries Agro Produce Private Limited, Golden Harvest Middle East FZC and a step down Subsidiary viz Amarak Chemicals FZC.

AAL has a very wide distribution network across the country. It operates along a distribution channel comprising of about more than 6,400 distributors and a direct retail touch point of more than 86,000 dealers. Their reach extends to most of the major fertilizer consuming districts of the country with the retail outlets spread over 27 states in India. It also wants to enter new markets in India by expanding its distribution activities in states like Kashmir, Kerala, Manipur and Goa. The current market capitalisation stands at Rs 156.05 crore.

Share Holding Pattern

Financial Details

• Market Cap (Rs Cr) – 153.19

• Company P/E (x) – 12.19

• Industry P/E (x) – 42.88

• Book Value (Rs) – 102.50

• Price / BV (x) – 1.15

• Dividend (%) – 20 %

• EPS (TTM) – 9.66

• Dividend Yield (%) – 1.70 %

• Face Value (Rs) – 10

Industry Overview

Agrochemicals are different chemical compounds that are mainly used in agriculture. Mostly, synthetic chemicals such as di-methyl amine and organophosphates are used as agrochemicals. Further, animal, plant manure are also used as agrochemicals. Agrochemicals are generally used by mixing with the soil and spraying on the crops. The primary functions of agrochemicals include protection of crops, improvement of crop yields, maintenance of the food & soil quality and modification of the growth process of plants. Based on these functions, agrochemicals are classified as pesticides, insecticides, herbicides, fungicides, fertilizers and liming & acidifying agents among others. Pesticides and fertilizers have had the largest share in the global agrochemicals consumption over the past few years. Apart from agricultural fields, agrochemicals are also used on indoor plants in domestic houses, on ornamental crops in nurseries and in animal husbandry.

Changing agrochemicals usage patterns followed by increased global population & consumer health awareness are the key driving factors of agrochemicals market demand. Population enlargement has resulted in increased food consumption. Hence a rise in demand for nutritious and quality foods is likely to occur over the coming years. This overall situation has led in extensive usage of agrochemicals, especially pesticides, fertilizers, insecticides and acidifying agents. Pesticides are used to manage and destroy pests, pathogens and other micro-organisms, while fertilizers are applied for advancement of plant growth. Insecticides are used as insect growth regulators while liming or acidifying agents are used to adjust the pH level in soils. Pesticides segment is growing at a greater pace than fertilizer. Growing horticulture and floriculture industries are likely to increase the demand for pesticides.

In terms of global demand for agrochemicals market, the developing countries in Asia Pacific region are expected to show a steadfast growth by the end of forecast period. China followed by Japan and India are anticipated to have favorable agrochemicals market by 2020. China is likely to show increased agrochemicals usage especially for maize, rice and soyabeans. In India, a similar scenario is anticipated since agrochemicals are mainly used for protection of cash crops, which include major cereals such as wheat, jowar rice as well as cotton and sugarcane.

Balance Sheet

Profit and Loss Account

Dividend History

Index and Company Price Movement Comparison

Technical Indicators

Important Ratios (YoY)

• PBIT – 17.45 v/s 16.74

• RoCE – 16.55 v/s 12.76

• RoE – 9.10 v/s 9.48

• Net Profit Margin – 4.90 v/s 4.91

• Return on net worth – 8.21 v/s 7.48

• D/E Ratio – 0.86 v/s 1.08

• Interest Cover – 1.74 v/s 1.67

• Current Ratio – 1.02 v/s 0.93

• Reserves – 127.38 cr v/s 119.18 cr

• PAT – 11.53 cr v/s 9.34 cr

• Total assets – 261.59 cr v/s 274.42 cr

• Net sales – 232.87 v/s 186.76 cr

• Book Value – 107.96 v/s 101.64

Simple Moving Average

Investment Rationalize

• Aries Agro Ltd (Aries Agro) is an agriculture chemicals manufacturer with a healthy cash flow and Revenue growing at a healthy CAGR of 10.8% in the last five years.

• Company have a well diversified portfolio of chemical nutrients and pesticides, which will help the company in order to capture the market potential in the product segment in an effective manner.

• Backward integration will help the company in effective production and cost control in manufacturing its products and helps to increase the profit margins considerably.

• Current capacity utilization of the company stands at less than 50%, with increase in product demand AAL will be able to meet market requirements without capital investments.

• Governments positive policies towards the development of agriculture will a huge boost for the growth of the company, as the per capita expenditure on agri chemicals in India is less than global average.

• AAL have a wide and effective marketing and distribution network and manufacturing facilities in locations which will help in reducing logistics expenses and tap the market demand.

• Increase in revenue from exports will increase the revenue and profit of the company as the profit margins from exports are higher than domestic margin.

• Price to Sales Ratio of the company stands at 0.66% which defines the stock is available at discounted price.