Small-cap fertiliser stock leaps 20% on first day of FY25; here's why

The stock of Best Agrolife more-than-halved, dropping 55 per cent, on the BSE during the previous fiscal year

Shares of small-cap fertiliser stock Best Agrolife were locked at the 20 per cent upper circuit at 1:45 PM on the BSE on Monday amid a rally in small-cap pack. While the the benchmark S&P BSE Sensex was up 0.5 per cent, the BSE SmallCap index was quoting 2.6 per cent higher at the time of writing of this report. 

On March 28, Best Agrolife approved the acquisition of 100 per cent stake in Sudarshan Farm Chemicals India Private Limited at an enterprise value of Rs 139 crore. However, after considering the Net Working Capital requirements and other liabilities, the actual cash outflow of Best Agrolife Limited will be Rs 9.5 crore.

Sudarshan Farm Chemicals India is engaged in the business of trading, marketing, exporting, importing, and dealing in chemicals including heavy chemicals, organic chemicals, agro chemicals, pesticides, insecticides, fungicides, weedicides, herbicides, and fertilisers.

"The acquisition, which is expected to be completed by the end of March, 2024,  is a step towards expanding the existing business operations and market footprint with better synergy," it said in its statement.

Best Agrolife is a small-cap company which operates in 'A' group with 'T+1' settlement. It was established in 1992, with am aim to service the agrochemical industry of India and international markets. A research-driven organisation, Best Agrolife offers high-quality, innovative, effective crop-protection and food safety solutions to farmers and serves the globe through agriculture.

Operationally, Seedlings India Private Limited, a wholly-owned subsidiary of the company, was granted registration for indigenous manufacture of Pymetrozine 30 per cent, Dinotefuran 10 per cent, and Pyraclostrobin 20 per cent by Central Insecticides board & Registration Committee (CIBRC), the company informed in an exchange filing on March 16. 

The company, it said, will launch the product under the brand name 'Defender'.

"This innovative formulation will significantly enhance crop health and productivity, offering four times stronger protection against fungal diseases such as Early Blight, Frog eye leaf spot, Alternaria leaf spot, and Alternaria leaf blight compared to conventional solutions," it added.

Separately, Best Crop Science Private Limited, another wholly-owned subsidiary of the company, was granted registration for the indigenous manufacture of Fomesafen technical 95 per cent

by CIBRC.

Fomesalen provides control of broadleaf weeds, grasses, and sedges in soybeans. It's applications can be pre-plant, pre-emergence, or post-emergence, making it highly adaptable to different farming practices.

For the first nine months of FY24, Best Agrolife reported a 17 per cent year-on-year growth in revenue at Rs 1,738 crore. By comparison, revenue during 9MFY23 stood at Rs 1,492 crore.

Despite the market challenges, the company remains optimistic about the prospects for the upcoming quarter (Q4FY24) and aims to achieve topline of more than Rs 2,000 crore, aided by a healthy Ebitda

Further, Best Agrolife established a holding company in Mauritius in January 2024 to strengthen its presence in the international market, facilitating its entry into the export business.

On the bourses, however, the stock more-than-halved, dropping 55 per cent, on the BSE during the previous fiscal year as against a nearly 70 per cent surge in the SmallCap index. The stock hit an all-time high of Rs 1,775 on December 5, 2022, and a lifetime low of Rs 202.35 on May 19, 2021. The stock commands a price-to-earnings ratio of 3.3x.