21 August 2014
1QFY15 Results Update | Sector:
Agri
Monsanto India
BSE SENSEX
26,360
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
S&P CNX
7,891
MCHM IN
17.3
36.9/0.6
2,415/560
-2/39/215
CMP: INR2,135
TP: INR2,600
Buy
Financials & Valuation (INR Million)
Y/E Mar
Net Sales
EBITDA
Adj PAT
EPS (INR)
Gr.(%)
BV/Share
(INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
2015E 2016E 2017E
6,739
1,771
1,623
94.0
24.5
258.6
41.0
45.7
22.7
8.3
8,028
2,181
2,040
118.2
25.7
341.8
39.4
43.7
18.1
6.2
9,533
2,648
2,477
143.5
21.5
450.3
36.2
40.3
14.9
4.7
Strong beat in growth, market share gain continues:
Monsanto reported 16% YoY
increase in overall revenues to INR2.65b as against INR2.28b in 1QFY14, beating
our estimate of INR2.45b (8% growth). Seeds grew ~14% primarily driven by price
increases and better product mix due to launch of newer products with higher
average selling price. Inspite of 10% de growth in industry volumes in Kharif
season (75,000MT market size), Monsanto has outpaced its competitors which
have seen 10-20% revenue de-growth in the corn segment. Monsanto has gained
market share in 1QFY15 and is on track to further improve its share to 30% over
next few years from 25% in FY14. Herbicide business grew ~17% led by increase in
prices as well as in volume, albeit in lower single digit. With monsoon picking up in
July we expect volume growth to pick up in herbicide segment in H2FY15. EBITDA
margins expanded 320bps to 31.3% in 1QFY15 from 28.1% in 1QFY14 primarily
due to reduction in other expenses. Consequently, Reported PAT grew 26.3% to
INR710m in 1QFY15 from INR562m in 1QFY14.
Rabi continues to hold promise; margins profile set to improve:
Management
believes that the company is strongly positioned to take benefit of Rabi season on
the back of newer product launches and improving age profile of its corn
portfolio. While MCHM’s 1HFY15 corn volume growth was muted due to weak
rainfall, we believe the company is on track for a robust Rabi crop. Company has
launched three new hybrids in FY15; most of them have been single-cross. We
expect higher share of single-cross in upcoming Rabi season to result in better
margin profile going forward.
Valuation and view:
We upgrade our estimates 20% and 3% for FY15E and FY16E,
respectively, to factor in market share gain in corn segment and strong upcoming
corn season. We believe that the investments made during FY09-12 have started
paying off for MCHM in terms of new product launches and market share gains.
We remain excited about the huge potential in genetically-modified (GM) foods
and MCHM’s Roundup Ready Flex. We upgrade our target price to INR 2,600 (22x
FY16E EPS) from INR2,300, Maintain
Buy.
Niket Shah
(Niket.Shah@MotilalOswal.com); +91 22 3982 5426
Atul Mehra
(Atul.Mehra@MotilalOswal.com); +91 22 3982 5417
Investors are advised to refer through disclosures made at the end of the Research Report.

Monsanto India
Strong beat in growth, market share gains continues
Monsanto reported 16% YoY increase in overall revenues to INR2.65b as against
INR2.28b in 1QFY14, beating our estimate of INR2.45b (8% growth).
Seeds grew ~14% primarily driven by price increases and better product mix due
to launch of newer products with higher average selling price.
Inspite of 10% de growth in industry volumes in Kharif season (75,000MT
market size), Monsanto has outpaced its competitors which have seen 10-20%
revenue de-growth in the corn segment.
Monsanto has gained market share in 1QFY15 and is on track to further improve
its share to 30% over next few years from 25% in FY14.
Herbicide business grew ~17% led by increase in prices as well as in volume,
albeit in lower single digit.
With monsoon picking up in July we expect volume growth to pick up in
herbicide segment in H2FY15.
EBITDA margins expanded 320bps to 31.3% in 1QFY15 from 28.1% in 1QFY14
primarily due to reduction in other expenses.
Consequently, Reported PAT grew 26.3% to INR710m in 1QFY15 from INR562m
in 1QFY14.
EBITDA margins expand 320bp YoY
EBITDA (INR m)
25.7
16.3
2,648
525
-21.1
275
-120
24.6
2.3
16
639
668
120
25
28.1
12.4
Margins (%)
36.6
Revenue growth strong led by pricing growth
Net Sales (INR m)
89.9
YoY Change (%)
69.6
62.8
31.3
3.3
828
2,044
14.1
8.4
570
13.3
690
1,121
2,276
11.4
966
1,825
8.8
751
Source: Company, MOSL
Source: Company, MOSL
Strong PAT growth continues
PAT (INR m)
YoY Growth (%)
160.3
122.4
15.6
651
40
26.3
710
Leadership in corn market in India
Nuziveedu, Others, 5%
10%
Kaveri, 14%
Market Share in Corn
Monsanto,
25%
10.4
486
0.2
13.3
-120.2
-162.7
562
293
15
76
-121
Du
Pont, 23%
Pioneer, 23
%
Source: Company, MOSL
Source: Company, MOSL
21 August 2014
2

Monsanto India
Rabi continues to hold promise; margins profile set to improve
Management believes that the company is strongly positioned to take benefit of
Rabi season on the back of newer product launches and improving age profile of
its corn portfolio.
While MCHM’s 1HFY15 corn volume growth was muted due to weak rainfall, we
believe the company is on track for a robust Rabi crop.
Company has launched three new hybrids in FY15; most of them have been
single-cross.
We expect higher share of single-cross in upcoming Rabi season to result in
better margin profile going forward.
21 August 2014
3

Monsanto India
Story in charts
Corn hybridization still at nascent stage in India
94%
88%
86%
% of Crop in Hybrid
85%
75%
60%
35%
Others
35%
5 States contributing 65% of the total corn production in India
Share by State
AP
22%
Mah 8%
Rajasthan
8%
Bihar
11%
Karnataka
16%
Source: Company
Source: Company
Worldwide Corn Production (mt)
Canada South Others
2% Africa 14%
Mexico
1%
2%
India Argentina
2%
3%
Ukraine
3%
EU
7%
Brazil
7%
China
22%
Worldwide Corn Consumption (mt)
Others
21%
US
37%
Indonesia
1% Egypt
Canada
1% Japan 1%
2% India
2%
Mexico
Brazil
3%
6% EU
8%
US
32%
China
23%
Source: Company, MOSL
Source: Company, MOSL
Herbicide penetration (%)
Consumption of Agrochemical is lowest in India
Source: Company, MOSL
Source: Company, MOSL
21 August 2014
4

Monsanto India
Monsanto India: an investment profile
=
Company description
Monsanto India limited (MCHM), the flagship company of
Monsanto company, is a subsidiary and the only listed
Monsanto entity outside the United States. MCHM has
partnered with farmers for over four decades. In India,
the Monsanto group operates through 3 entities i.e. (1)
the listed entity Monsanto India Ltd (MCHM) which is
primarily involved in Maize seeds and Herbicides; (2)
50:50 JV between Mahyco and Monsanto Holdings Pvt.
Ltd known as Mahyco Monsanto Biotech (MMB) which is
sub-licensed to distribute BT cotton technology in India;
and (3) Monsanto Holding.
Key investment argument
Monsanto has launched 7-8 hybrids in last 2 years
leading of regain of market share from players like
pioneer and DuPont which are around 20-23% market
each
Monsanto India currently derives 40% of its revenues
from products launched in last 2 years.
Operational efficiencies and consolidation measures
have helped reduce seed write offs to less than 7% of
revenues from an average of 20% for last 3 years.
Farmers choosing maize hybrid seeds have
contributed to increasing maize production by
approximately 93 per cent in the last 11 years.
Monsanto has a ~60% market share in the
global USD5.4b glyphosate industry and ~25%
market share in the Indian INR8b glyphosate
industry selling products under the ‘Roundup’
brand.
Investment risks
Failure of performance of the product.
Competitor product starts giving better yields.
Farmers choosing other crops like cotton etc.
over maize resulting in decrease in acerages.
Valuation and view
We upgrade our estimates 20% and 3% for FY15E
and FY16E, respectively, to factor in market share
gain in corn segment and strong upcoming corn
season. We believe that the investments made
during FY09-12 have started paying off for MCHM
in terms of new product launches and market
share gains. We remain excited about the huge
potential in genetically-modified (GM) foods and
MCHM’s Roundup Ready Flex. We upgrade our
target price to INR 2,600 (22x FY16E EPS) from
INR2,300, Maintain
Buy.
Target price and recommendation
Current
Price (INR)
2,135
Target
Price (INR)
2,600
Upside
(%)
21.8
Reco
Buy
EPS: MOSL forecast v/s consensus (INR)
MOSL
Forecast
FY15
FY16
94.0
118.2
Consensus
Forecast
90.6
119.9
Variation
(%)
3.7
-1.4
Shareholding pattern (%)
Jun-14
Promoter
DII
FII
72.1
3.3
1.4
Mar-14
72.1
2.5
0.3
25.1
Jun-13
72.1
2.1
0.0
25.7
Stock performance (1-year)
Others
23.2
Notes: FII includes depository receipts
21 August 2014
5

Monsanto India
Financials and valuation
Income statement
Y/E Mar
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Min. Int. & Assoc. Share
Adj Cons PAT
2014
5,819
31.5
1,450
24.9
119
1,331
5
129
-69
1,524
159
10.4
1,365
1,304
93.6
0
1,304
2015E
6,739
15.8
1,771
26.3
133
1,638
0
168
0
1,807
184
10.2
1,623
1,623
24.5
0
1,623
(INR Million)
2016E
8,028
19.1
2,181
27.2
147
2,033
0
233
0
2,266
227
10.0
2,040
2,040
25.7
0
2,040
2017E
9,533
18.7
2,648
27.8
162
2,485
0
267
0
2,752
275
10.0
2,477
2,477
21.5
0
2,477
Ratios
Y/E Mar
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Cash P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios (%)
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Leverage Ratios (%)
Net Debt/Equity (x)
2014
75.5
82.4
199.6
30.0
44.2
28.3
25.9
10.7
4.7
19.0
1.4
34.7
38.8
1.7
19.9
106.1
115.3
0.0
2015E
94.0
101.7
258.6
30.0
37.2
22.7
21.0
8.3
3.9
15.0
1.4
41.0
45.7
1.5
19.9
107.4
118.8
0.0
2016E
118.2
126.7
341.8
30.0
29.6
18.1
16.9
6.2
3.1
11.6
1.4
39.4
43.7
1.4
19.9
103.9
116.3
0.0
2017E
143.5
152.9
450.3
30.0
24.4
14.9
14.0
4.7
2.5
8.8
1.4
36.2
40.3
1.2
19.9
102.4
115.6
0.0
Balance sheet
Y/E Mar
Share Capital
Reserves
Net Worth
Debt
Deferred Tax
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
2014
173
3,272
3,445
0
0
3,445
1,678
793
885
0
2,667
2,523
1,692
330
85
416
2,668
1,934
734
-145
3,445
2015E
173
4,291
4,464
0
0
4,464
1,878
925
952
37
2,667
3,900
1,984
382
1,060
474
3,130
2,259
871
770
4,464
(INR Million)
2016E
2017E
173
173
5,727
7,600
5,899
7,772
0
0
0
0
5,899
7,772
2,078
2,278
1,073
1,235
1,005
1,043
44
52
2,667
2,667
5,698
8,050
2,285
2,674
455
541
2,403
4,186
555
650
3,552
4,077
2,628
3,088
925
989
2,146
3,973
5,899
7,772
E: MOSL Estimates
Cash flow statement
Y/E Mar
OP/(Loss) before Tax
Depreciation
Others
Interest
Direct Taxes Paid
(Inc)/Dec in Wkg Cap
CF from Op. Activity
(Inc)/Dec in FA & CWIP
(Pur)/Sale of Invt
Others
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Interest Paid
Divd Paid (incl Tax)
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
2014
1,455
119
0
-124
159
664
1,886
-112
-158
-1,125
-1,395
0
0
-5
-604
-609
-118
203
85
2015E
1,807
133
0
-168
184
61
1,647
-237
0
168
-68
0
0
0
-604
-604
975
85
1,060
(INR Million)
2016E
2,266
147
0
-233
227
-34
1,920
-207
0
233
26
0
0
0
-604
-604
1,342
1,060
2,402
2017E
2,752
162
0
-267
275
-45
2,328
-208
0
267
59
0
0
0
-604
-604
1,783
2,402
4,185
21 August 2014
6

Monsanto India
NOTES
21 August 2014
7

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Monsanto India
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MONSANTO INDIA LTD
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21 August 2014
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8