🟢 1. At a Glance
Ambey Laboratories Ltd, a Delhi-based agrochemical SME, makes 2,4-D herbicides and has been around since 1985. Revenue is slowly crawling up (₹131 Cr in FY25), but profitability is meh, cash flow is negative ₹34 Cr, and working capital days have exploded. Despite this, the company is issuing ₹50 Cr worth of preferential warrants and increasing capital base to ₹37 Cr. Smells more like dilution than growth.
🎬 2. Introduction with Hook
Crop protection? ✔️
Old-school chemistry? ✔️
Debtor days doubling? ✔️
Preferential issue? Oh, hell yes.
Ambey Laboratories ticks all the SME chaos boxes. You have:
- Negative operating cash flow.
- High-interest borrowing repaid and then replaced.
- And a ₹50 Cr warrant issue, just when you were wondering where the real fertilizer was going.
Let’s dissect this lab-grown cocktail of agro formulas and financial engineering.
🌾 3. Business Model – WTF Do They Even Do?
Ambey manufactures and sells generic agrochemicals — mostly herbicides and fungicides, including:
- 🌿 2,4-D Amine Salt variants (480 to 866 gm/liter SL)
- 🧪 2,4-D Acid, 2,4-D Ester variants (ethyl, sodium, hexyl)
- 🌱 Hexaconazole (5% min) — fungicide
🚜 Customer Base: Farmers and B2B agro-distributors
🏭 Setup: In-house manufacturing with CWIP ramping up again
📦 Products: Bulk chemical ingredients; mostly off-patent
Summary? Classic old-school agro formulation player. Nothing IP-heavy, no innovation… just volume + trade margins.
💰 4. Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 105 | 120 | 131 |
| Net Profit (₹ Cr) | 5 | 8 | 5 |
| OPM % | 7% | 8% | 7% |
| ROCE | 22% | 17% | 10% |
| ROE | 12% | 13% | 8.9% |
😬 That margin + ROCE trend?
Downward spiral. Costs rising, and growth not fast enough to catch up.
📉 5. Valuation – Is It Cheap, Meh, or Crack?
- 📌 Current Price: ₹37.9
- 📌 EPS (FY25): ₹1.92
- 📌 P/E: ~19.8x
- 📌 Book Value: ₹30.6
- 📌 P/B: 1.24x
🧮 Fair Value Range (EduCalc™):
| P/E Band | FV Range ₹ |
|---|---|
| 10x | ₹19 |
| 15x | ₹29 |
| 20x | ₹38 |
🎯 FV Range: ₹28 – ₹38
Stock is currently near top-end of its rational band. Not frothy… but not cheap either.
🧨 6. What’s Cooking – News, Triggers, Drama
🧾 Key Updates (June–July 2025):
- 💥 ₹50 Cr preferential warrant issue approved in June 2025
- 🧾 Authorized capital hiked to ₹37 Cr
- 🏦 ₹53 Cr NCDs repaid before maturity — just in time for new warrants
- 🧪 CWIP up from ₹4 Cr to ₹16 Cr — possible capex cycle
- 📉 TTM Profit down 40% YoY
🎭 Plot twist: They’re building something… but funding it with dilution, not profits.
🏦 7. Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY24 | FY25 |
|---|---|---|
| Equity Capital | ₹19 Cr | ₹25 Cr |
| Reserves | ₹13 Cr | ₹51 Cr |
| Borrowings | ₹30 Cr | ₹41 Cr |
| Total Liabilities | ₹79 Cr | ₹127 Cr |
| Fixed Assets | ₹24 Cr | ₹23 Cr |
| CWIP | ₹4 Cr | ₹16 Cr |
| Other Assets | ₹51 Cr | ₹88 Cr |
📌 Debt up again despite NCD prepayment
📌 CWIP tripled – capex on?
📌 Shareholder equity dilution imminent
💵 8. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | FCF? | Commentary |
|---|---|---|---|
| FY23 | ₹10 Cr | ✅ | Decent ops cash |
| FY24 | ₹-13 Cr | ❌ | Working capital hit |
| FY25 | ₹-34 Cr | ❌ | Nightmare — cash burn festival |
They made ₹5 Cr PAT in FY25, but burned ₹34 Cr in operating cash. Where’s the money going?
👉 Mostly tied in receivables, inventory, and WC.
📐 9. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| Debtor Days | 12 | 57 | 112 (!!) |
| Inventory Days | 78 | 75 | 93 |
| CCC | 17 | 78 | 185 💀 |
| Working Capital | 22 | 90 | 209 |
| ROCE | 22% | 17% | 10% |
💣 Debtors doubled.
💣 CCC tripled.
💣 ROCE halved.
This is not how operational health is supposed to look after 40 years of business.
💸 10. P&L Breakdown – Show Me the Money
- Revenue grew 9% in FY25
- Net Profit fell 40%
- OPM stuck at 7%
- No other income magic, no extraordinary items
Plain, boring, and increasingly fragile.
⚔️ 11. Peer Comparison – Who Else in the Game?
| Peer | P/E | OPM % | ROCE | MCap (₹ Cr) |
|---|---|---|---|---|
| PI Industries | 36.9x | 27.3% | 22.6% | 61,325 |
| Dhanuka Agritech | 25.8x | 20.5% | 28.3% | 7,536 |
| Rallis India | 51.8x | 10.8% | 10.1% | 6,437 |
| Ambey Labs (SME) | 19.8x | 7% | 9.6% | 94.5 |
🔍 Clearly underperforms on profitability, despite lower P/E
🎯 But also not comparable — this is a micro-cap B2B formulation SME
🧬 12. Miscellaneous – Shareholding, Promoters
| Holder | Sep ’24 | Mar ’25 |
|---|---|---|
| Promoter | 69.9% | 70.1% |
| FIIs | 1.46% | 0.01% |
| DIIs | 4.11% | 2.34% |
| Public | 24.53% | 27.54% |
📌 FIIs almost vanished
📌 Public participation increasing
📌 New warrants likely to change cap table dramatically
🧑⚖️ 13. EduInvesting Verdict™
Ambey Labs is a case study in SME finance:
✅ Debt was repaid… then replaced
✅ Revenue growing slowly
❌ Margins flat, cash flows horrible
❌ Debtors, inventory, WC bloated
❌ Dilution wave incoming
They’ve been around since 1985, but still need ₹50 Cr via warrants?
Fair Value Range = ₹28 – ₹38
Current Price = ₹37.9
Right at the edge. One more debt-funded expansion or collection delay, and you’re looking at ₹25.
Final Take:
“Hexaconazole may kill weeds, but it can’t kill working capital stress.”
✍️ Written by Prashant | 📅 10 July 2025
Tags: ambey laboratories, agrochemical stocks, sme ipo, preferential issue, agrochemicals india, 2,4-d herbicide, working capital crisis, sme finance, fair value analysis
