1. At a Glance
Heranba Industries Ltd—once a chemical champ—is navigating turbulent waters. The ₹1,562 Cr market cap company makes pyrethroids (synthetic insecticides), but despite production expansion, profits are vanishing faster than mosquitoes after fogging.
2. Introduction with Hook
Imagine launching a brand-new rocket… and it fizzles at 10 feet.
That’s Heranba in FY25.
- EPS fell to ₹0.77 despite a ₹375 Cr expansion at Sarigam.
- FY25 net profit crashed from ₹34 Cr to ₹2 Cr.
- Quarterly profit in Q4 FY25: –₹42 Cr. Yes, a red splash.
All while the competition was busy printing double-digit ROCEs.
3. Business Model – WTF Do They Even Do?
Heranba makes agrochemicals. But not your average fertilizer.
Their secret sauce? Synthetic pyrethroids—high-efficiency pest killers used in agriculture and public health.
Product Categories:
- Insecticides (flagship)
- Herbicides
- Fungicides
- Public health products
Revenue Sources:
- Domestic agrochemical sales
- Exports (especially Africa, LatAm, Asia)
- B2B API contracts
4. Financials Overview
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 1,319 | 1,257 | 1,410 |
| EBITDA (₹ Cr) | 156 | 77 | 98 |
| Net Profit (₹ Cr) | 104 | 34 | 2 |
| EPS (₹) | 26.08 | 8.72 | 0.77 |
| ROCE (%) | 7% | 4% | 4.4% |
| ROE (%) | 0.3% | 0.27% | 0.27% |
Sidenote: That 694 P/E isn’t a typo—it’s a reflection of depressed profits, not valuation exuberance.
5. Valuation – What’s This Stock Worth?
Let’s do a sobering calc:
- Sector avg P/E: 25–40×
- EPS (TTM): ₹0.77
- Fair Value Range: ₹20 – ₹35 (if normalized EPS is considered ₹2–₹3, based on FY26 recovery estimates)
So while the CMP ₹390 looks “discounted”, fundamentals scream caution.
6. What-If Scenarios
| Scenario | Outcome |
|---|---|
| Sarigam Phase-II delivers ₹400 Cr | EPS could bounce to ₹10+ |
| Agrochemical prices rise | Operating margin rebounds |
| More red quarters | Balance sheet will start to crack |
| Global demand spikes (exports) | Cash flows revive, ROCE improves |
7. What’s Cooking – News, Triggers, Drama
- Sarigam Phase-II Launched: 9000 MTPA; ₹375–₹475 Cr revenue guidance
- CFO Resigned: Rajkumar Bafna quit in June 2025
- Q4 Loss: ₹42 Cr net loss shocked investors
- Rating Updates: CRISIL warning lights blinking
So yes—while the factory is running, the financial engine’s misfiring.
8. Balance Sheet
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity Capital | 40 Cr | 40 Cr | 40 Cr |
| Reserves | 770 Cr | 803 Cr | 801 Cr |
| Total Borrowings | 93 Cr | 165 Cr | 349 Cr |
| Fixed Assets | 209 Cr | 445 Cr | 662 Cr |
| Total Liabilities | 1,162 Cr | 1,477 Cr | 1,813 Cr |
Key Concern: Borrowings doubled, but return on capital hasn’t followed.
9. Cash Flow – Sab Number Game Hai
| Item | FY23 | FY24 | FY25 |
|---|---|---|---|
| Cash from Ops | 0 Cr | 107 Cr | 101 Cr |
| Cash from Investing | 0 Cr | –241 Cr | –239 Cr |
| Cash from Financing | 0 Cr | 62 Cr | 152 Cr |
| Net Cash Flow | 0 Cr | –72 Cr | +14 Cr |
Comment: Operations are still generating cash, but capex drag + debt load = brewing stress.
10. Ratios – Sexy or Stressy?
| Ratio | FY24 | FY25 |
|---|---|---|
| ROCE | 4% | 4.4% |
| ROE | 0.27% | 0.27% |
| Interest Coverage | Declining | Weak |
| Inventory Days | 116 | 130 |
| Debtor Days | 136 | 144 |
| Cash Conversion Cycle | 129 days | 86 days |
Verdict: Not sexy, not fatal either. But definitely stressy.
11. P&L Breakdown – Show Me the Money
| Metric | Q4FY24 | Q1FY25 | Q4FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 437 | 341 | 335 |
| EBITDA (₹ Cr) | 60 | 13 | –14 |
| Net Profit (₹ Cr) | 38 | –10 | –42 |
| OPM % | 14% | 4% | –4% |
| EPS (₹) | 9.49 | –2.55 | –10.37 |
That –4% OPM is the business version of a nosebleed.
12. Peer Comparison
| Company | ROCE % | EPS (TTM) | P/E | OPM % | Mcap (₹ Cr) |
|---|---|---|---|---|---|
| PI Industries | 22.6% | ₹58 | 37.6 | 27.3% | ₹62,521 |
| Dhanuka Agritech | 28.2% | ₹73 | 27.4 | 20.5% | ₹8,008 |
| Bayer CropScience | 24.8% | ₹143 | 50.2 | 12.6% | ₹28,527 |
| Rallis India | 10.1% | ₹6.6 | 41.1 | 12.0% | ₹7,040 |
| Heranba | 4.4% | ₹0.77 | 694.0 | 7.0% | ₹1,562 |
Translation: Others are running marathons. Heranba is still lacing up its shoes.
13. EduInvesting Verdict™
Heranba is in rebuild mode. After an ugly FY25, the Sarigam expansion could light the fuse for a turnaround—but as of now, it’s all promise and very little profit.
CFO exits, rising debt, and quarterly losses mean this is a watchlist stock, not a front-runner. Until margins and PAT start behaving, Heranba’s sweet spot remains elusive.
Metadata
– Written by EduInvesting Analyst | July 20, 2025
– Tags: Heranba Industries, Agrochemicals, Pyrethroids, Turnaround Story, Small Cap India
