An integrated agrochemical company - Sabero Organics is engaged in manufacturing of variety of Fungicides, Herbicides and Insecticides.

With recent expansion of capacities in January-February’09, the capacity of key products has almost doubled. It exports almost 65-70% of the products to MNC agrochem giants, while 30% comes from domestic markets [where its focus is branded formulations].

It has long term supply arrangements with most of the bulk foreign buyers, where sales are based on market oriented fair prices, considering input price trend also.

In domestic market it has around 13 stockiest and 500 dealers across the country.

Company is almost fully integrated and in case of key phosphorus based products, it manufactures them right from the basic phosphorus stage; thus value addition is quite high.

Apart from this in general, Agrochemicals players in India are doing well because of a) shifting of production base from developed world to this part of world, due to cost advantage; b) Rising prices of these products, due to China imposing stricter norms for environmental protection, which led to closure of large capacities and for rest, cost of production went up due to installation of waste/water treatment plants.

The entry barrier in this business is – Product registrations for sales in global markets. Like pharma generics, here you need to get field trial of products and inspection of manufacturing sites to comply with GMP, which takes time to get approvals from authorities of different countries.

Here the company has almost 200 registrations for bulk technical and 45 product registrations for formulations, across US, Europe and other 30 countries.

At present stock discounts 2010 earnings by just 2X and going by stated target of attaining Rs1,000 crore turnover in 2-3 years, it deserves at least 4-5X discounting, leading to one year target of Rs 48-60 and 2-year target in the range of Rs75-90.