15 February 2016
Q3FY16 Results Update | Sector: Fertilizers
Monsanto India
Buy
BSE SENSEX
23,554
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm/ Vol m
Free float (%)
S&P CNX
7,163
MCHM IN
17.3
34.4 / 0.5
3540 / 1965
-11/-16/-22
75
27.9
CMP: INR1,991 TP: INR2,350(+18%)
Results above estimates; FY17 to see rebound led by favorable crop shift
Results above estimates led by strong growth in corn:
Revenue grew 14.8%
YoY to INR1.5b (est. INR1.4b) due to strong growth in corn business where
volumes grew in double digits (led by double digit acreages growth in rabi)
while pricing saw low single digit growth. Realizations have also been strong
given that final commodity prices have corn have been on the higher side. Corn
prices have been INR14-15/kg as against INR12.5/kg which was prevalent
during the kharif season. Growth has been strong in states like Bihar which are
Monsanto strongholds, compensating the subdued growth in southern part –
states like Andhra Pradesh and Telangana, which has been relatively low due to
poor monsoon.
Margin growth stunted by continued lower glyphosate prices:
EBITDA came in
at INR466m (est. INR376m) in 3QFY16 while margins stood at 30.3% (est. 27%)
as against 34.2% in 3QFY15. Margin contraction is due to the benign prices of
glyphosate since Monsanto procures it based on a cost plus 2-3% formula.
Glyphosate selling prices have declined 30-35% on YTD basis. Exceptional items
included an expense of INR56m towards employee severance cost.
Consequently, Adjusted PAT stood at INR463m in 3QFY16 (est. INR365m) as
against a profit of INR483m in 3QFY15. .
Valuation and view:
Two years back to back have been marked by low corn
acreages. We believe with normal monsoon expected in FY17 and considering
the increase in prices of corn seen recently, conditions are apt for a crop shift
to be seen in favour of corn, which should benefit Monsanto strongly given its
market leadership in corn. 3QFY16 was the last quarter of glyphosate prices de-
growth and 4QFY16 should see base effect kicking in, aiding margin expansion
in view of higher volumes and lower base. Our estimates remain unchanged.
Maintain Buy with a TP of INR2,350, 26x FY18E EPS (rolled over to FY18).
Financials & Valuations (INR b)
Y/E Mar
2016E 2017E 2018E
5.2
6.5
8.1
Net Sales
0.9
1.4
1.8
EBITDA
0.8
1.2
1.6
PAT
47.1
72.0
90.3
EPS (INR)
-23.6
53.1
25.4
Gr. (%)
203.8 203.8 222.0
BV/Sh (INR)
22.4
35.3
42.4
RoE (%)
26.0
41.1
49.3
RoCE (%)
42.3
27.6
22.0
P/E (x)
9.8
9.8
9.0
P/BV (x)
Estimate change
TP change
Rating change
Niket Shah
(Niket.Shah@MotilalOswal.com); +91 22 3982 5426
Chintan Modi
(Chintan.Modi@MotilalOswal.com); +912239825422/Kaustubh
Kale
(Kaustubh.Kale@MotilalOswal.com); +912230102498
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Monsanto India
Results above expectations
Revenue grew 14.8% YoY to INR1.5b (est. INR1.4b) due to strong growth in corn
business where volumes grew in double digits (led by double digit acreages
growth in rabi) while pricing saw low single digit growth.
Realizations have also been strong given that final commodity prices have corn
have been on the higher side.
Corn prices have been INR14-15/kg as against INR12.5/kg which was prevalent
during the kharif season.
Growth has been strong in states like Bihar which are Monsanto strongholds,
compensating the subdued growth in southern part – states like Andhra Pradesh
and Telangana, which has been relatively low due to poor monsoon.
Margin growth stunted by continued lower glyphosate prices
EBITDA came in at INR466m (est. INR376m) in 3QFY16 while margins stood at
30.3% (est. 27%) as against 34.2% in 3QFY15.
Margin contraction is due to the benign prices of glyphosate since Monsanto
procures it based on a cost plus 2-3% formula. Glyphosate selling prices have
declined 30-35% on YTD basis.
Exceptional items included an expense of INR56m towards employee severance
cost.
Consequently, Adjusted PAT stood at INR463m in 3QFY16 (est. INR365m) as
against a profit of INR483m in 3QFY15.
Exhibit 2: Quarterly EBITDA trend
YoY Change (%)
EBITDA (INR m)
15
-58
674 2,633 378 1,537
28
37
3
25
31
-2
828
-21
458
-104
34
-15
712
-256
-68
466
Margins (%)
27
30
Exhibit 1: Quarterly sales trend
Net Sales (INR m)
72
11
63
9
16
-8
1,339
2,276 979 1,825 751 2,648 904
-27
-10
-1
14
639 132 668
Source: Company, MOSL
Source: Company, MOSL
Exhibit 3: Quarterly PAT trend
PAT (INR m)
122.4
562
0.0
15.6
77
651
28
78.6
710
26.3
0.0
-48
483
628
463
YoY Growth (%)
Exhibit 4: Market share in corn
Others,
14%
Syngenta,
5%
Nuziveedu,
15%
Pioneer Du
Pont, 24%
Market Share
Monsanto,
28%
0.0 -11.6 0.0 -4.3
-25.8
-75
-264
Kaveri, 14%
Source: Company, MOSL
Source: Company, MOSL
15 February 2016
2

Monsanto India
FY17 to see rebound led by expected crop shift and glyphosate bottoming
out
Two years back to back have been marked by low corn acreages.
We believe with normal monsoon expected in FY17 and considering the increase
in prices of corn seen recently, conditions are apt for a crop shift to be seen in
favour of corn, which should benefit Monsanto strongly given its market
leadership in corn.
3QFY16 was the last quarter of glyphosate prices de-growth and 4QFY16 should
see base effect kicking in, aiding margin expansion in view of higher volumes
and lower base.
Exhibit 6: PAT to post 14% CAGR over FY15-18
PAT (INR m)
8,070
1,559
1,290
532
673
1,063
1,243
812
Exhibit 5: Revenues to post 13% CAGR over FY15-18
Revenues (INR m)
3,634 3,738
4,424
5,818 5,564
5,233
6,498
500
FY11
FY12
FY13
FY14
FY15 FY16E FY17E FY18E
Source: Company, MOSL
FY11
FY12
FY13
FY14
FY15 FY16E FY17E FY18E
Source: Company, MOSL
15 February 2016
3

Monsanto India
Valuation and view
We value MCHM at 26x FY18 EPS of INR90.3 (rolled over to FY18) and arrive at a
price target of INR2,350.
We believe our target multiple is justified, given the following:
Continued leadership in corn segment, with 28% market share.
New product launches, which have reduced age of portfolio to below 8 years.
Increasing hybrid penetration in corn (from 60% to 80% in the next five years).
Pending approval for GM crop, if received, can improve yields by 20-40% over
existing crops, which will drive up profitability.
Differentiated offering in terms of providing Monsanto Farm Advisory Services
(MFAS) to the farmer free of cost, which improves the brand loyalty.
We believe the following factors pose risks to our assumptions:
Irregularities in rainfall can change the cropping pattern.
Newly launched hybrids yielding lower than expected yields.
Delay in GM crop launch due to regulatory issues.
Exhibit 7: 10-years P/E chart
75
60
45
30
15
0
27.8
20.7
24.5
28.3
P/E (x)
5 Yrs Avg(x)
15 Yrs Avg(x)
10 Yrs Avg(x)
Exhibit 8: 10-year P/BV chart
20.5
16.5
12.5
8.5
4.5
4.5
0.5
6.8
9.7
5.5
P/B (x)
5 Yrs Avg(x)
15 Yrs Avg(x)
10 Yrs Avg(x)
Source: Company, MOSL
Source: Company, MOSL
15 February 2016
4

Monsanto India
Operating metrics
Exhibit 9: Volume growth
Particulars
Gylophosate Volume (MT) growth (%)
Seed Volume (MT) growth (%)
FY10
-11.9
10.3
FY11
-15.5
21.7
FY12
8.0
-4.6
FY13
34.0
7.0
FY14
20.0
8.8
FY15
-10.0
-13.5
FY16E
15.0
-6.0
FY17E
15.0
10.0
FY18E
15.0
10.0
Exhibit 10:
Revenue
Mix
Particulars
Seed business
Agro Chemical business
FY10
65%
35%
FY11
72%
28%
FY12
69%
31%
FY13
65%
35%
FY14
63%
37%
FY15
63%
37%
FY16E
71%
29%
FY17E
70%
30%
FY18E
70%
30%
Exhibit 11: Revenue Growth
Particulars
Seed business (%)
Agro Chemical business (%)
FY10
19.1
-24.9
FY11
-1.1
-16.6
FY12
-0.7
12.5
FY13
11.3
38.4
FY14
30.0
39.4
FY15
-4.8
-1.0
FY16E
5.3
-25.3
FY17E
23.2
26.5
FY18E
23.2
26.5
15 February 2016
5

Monsanto India
Story in charts
Exhibit 12: Corn hybridization still at nascent stage in India
94%
88%
86%
% of Crop in Hybrid
85%
75%
Exhibit 13: Five states contribute 65% of total corn
production in India
60%
35%
Source: Company, MOSL
Source: Company, MOSL
Exhibit 14: Worldwide corn production (mt)
Canada
2%
Mexico
2%
India
Argentina
3%
Ukraine
3%
2%
South Others
Africa 14%
1%
US
37%
Exhibit 15: Worldwide corn consumption (mt)
Indonesia Others
21%
1%
Egypt
1%
Canada
1%
Japan
2%
India
2% Mexico
3% Brazil
6% EU
8%
US
32%
EU
7% Brazil
7%
China
22%
China
23%
Source: Company, MOSL
Source: Company, MOSL
Exhibit 16: Herbicide penetration (%)
62%
India
Global
48%
26%
16%
Exhibit 17: Consumption of agrochemicals is lowest in India
11
Consumption of Agrochemicals (Kg / Hectare)
9.4
6.6
4.6
4.2
2.5
2.4
2.3
23%
1.3
20%
2% 2%
0.6
Insecticides
Fungicides
Herbicides
Others
Source: Company, MOSL
Source: Company, MOSL
15 February 2016
6

Monsanto India
Financials and Valuations
Income Statement
Y/E Mar
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Min. Int. & Assoc. Share
Reported PAT
Adjusted PAT
Change (%)
2011
3,634
-11.4
652
17.9
108
544
3
84
-122
503
75
14.8
0
428
532
-1.2
2011
86
3,657
3,743
0
-30
3,714
1,395
518
876
51
1,514
2,367
1,303
409
172
484
1,095
831
264
1,273
3,714
2012
3,738
2.9
550
14.7
90
460
13
152
3
601
100
16.5
0
502
500
-6.1
2012
173
3,671
3,844
0
-27
3,817
1,380
571
809
111
1,958
2,476
1,297
504
190
485
1,537
1,203
334
939
3,817
2013
4,424
18.4
697
15.7
109
588
7
169
0
750
76
10.2
0
673
673
34.8
2013
173
3,902
4,074
0
-36
4,038
1,541
674
868
24
2,509
2,503
1,394
412
203
494
1,866
1,440
427
637
4,038
2014
5,818
31.5
1,451
24.9
119
1,332
5
129
-69
1,387
159
11.4
0
1,229
1,290
91.6
2014
173
3,272
3,445
0
-37
3,408
1,656
773
883
2
2,667
2,523
1,692
330
85
416
2,668
1,934
734
-145
3,408
2015
5,564
-4.4
1,161
20.9
79
1,081
4
213
0
1,290
227
17.6
0
1,063
1,063
-17.6
2015
173
3,571
3,743
0
-43
3,700
1,692
821
871
7
1,895
3,169
2,551
247
66
305
2,242
1,649
593
927
3,700
2016E
5,076
-8.8
888
17.5
85
804
0
110
0
914
128
14.0
0
786
786
-26.1
2016E
173
3,319
3,492
0
-43
3,449
1,892
905
987
7
1,895
3,402
2,484
225
410
282
2,841
1,578
1,263
561
3,449
2017E
6,304
24.2
1,387
22.0
94
1,293
0
132
0
1,425
199
14.0
0
1,225
1,225
56.0
2017E
173
3,300
3,472
0
-43
3,429
2,092
1,000
1,092
8
1,895
3,831
2,916
280
296
339
3,397
1,880
1,516
434
3,429
(INR Million)
2018E
7,831
24.2
1,723
22.0
104
1,619
0
158
0
1,778
249
14.0
0
1,529
1,529
24.8
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
(INR Million)
2018E
173
3,583
3,756
0
-43
3,713
2,292
1,103
1,189
10
1,895
4,526
3,622
348
148
409
3,907
2,336
1,571
619
3,713
15 February 2016
7

Monsanto India
Financials and Valuations
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)
2011
30.8
37.1
216.9
10.0
46.9
67.9
56.4
9.6
9.9
55.1
0.5
14.7
17.3
1.0
40
131
54
-0.5
2011
652
28
316
-100
0
896
-111
785
-706
67
-750
0
0
-6
-167
-173
-27
198
172
2012
29.0
34.2
222.7
20.0
79.9
72.2
61.2
9.4
9.6
65.3
1.0
13.2
16.1
1.0
48
127
70
-0.6
2012
550
37
258
-125
0
721
-96
624
-421
118
-399
0
0
-3
-291
-294
27
163
190
2013
39.0
45.3
236.0
22.0
65.8
53.6
46.1
8.9
8.1
51.5
1.1
17.0
19.1
1.1
33
115
86
-0.7
2013
697
37
253
-93
0
894
-86
808
-552
161
-476
0
0
-3
-392
-395
23
180
203
2014
74.7
81.6
199.6
92.0
151.2
28.0
25.6
10.5
6.2
24.8
4.4
34.3
38.9
1.7
20
106
87
-0.8
2014
1,451
34
226
-176
0
1,534
-114
1,421
-158
116
-155
0
0
-4
-1,470
-1,474
-95
180
86
2015
61.6
66.2
216.9
36.0
70.3
34.0
31.6
9.6
6.5
31.1
1.7
29.6
36.0
1.5
15
167
78
-0.5
2015
1,161
57
-891
-237
0
90
-93
-3
-6,681
7,544
770
0
0
4
-978
-974
-114
180
66
2016E
45.5
50.4
202.3
50.0
132.0
46.0
41.5
10.3
7.0
40.2
2.4
21.7
25.2
1.5
15
179
83
-0.7
2016E
888
0
710
-128
0
1,470
-199
1,271
0
110
-89
0
0
0
-1,037
-1,037
344
66
410
2017E
71.0
76.4
201.2
60.0
101.6
29.5
27.4
10.4
5.7
25.8
2.9
35.2
40.9
1.8
15
169
79
-0.6
2017E
1,387
0
13
-199
0
1,201
-202
999
0
132
-70
0
0
0
-1,245
-1,245
-114
410
296
2018E
88.6
94.6
217.6
60.0
81.4
23.6
22.1
9.6
4.6
20.9
2.9
42.3
49.2
2.1
15
169
79
-0.5
Cash Flow Statement
Y/E Mar
Adjusted EBITDA
Non cash opr. exp (inc)
(Inc)/Dec in Wkg. Cap.
Tax Paid
Other operating activities
CF from Op. Activity
(Inc)/Dec in FA & CWIP
Free cash flows
(Pur)/Sale of Invt
Others
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Interest Paid
Divd Paid (incl Tax) & Others
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
(INR Million)
2018E
1,723
0
-334
-249
0
1,140
-202
938
0
158
-44
0
0
0
-1,245
-1,245
-149
296
148
15 February 2016
8

Monsanto India
Corporate profile
Company description
Exhibit 1: Sensex rebased
Monsanto India (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.
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Promoter
DII
FII
Others
Sep-15
72.1
3.3
3.5
21.1
Jun-15
72.1
3.7
2.1
22.0
Sep-14
72.1
2.6
2.2
23.1
Exhibit 3: Top holders
Holder Name
R C Khanna
Morgan Stanley Investment Funds Global
Opportunity Fund
DSP Blackrock 3 Years Close Ended Equity
Fund
NA
NA
% Holding
2.3
1.3
1.1
0.0
0.0
Source: Capitaline
Note: FII Includes depository receipts
Source: Capitaline
Exhibit 4: Top management
Name
Sekhar Natarajan
Shilpa Divekar Nirula
Chandana Dhar
Designation
Chairman
Managing Director
Company Secretary
Exhibit 5: Directors
Name
C Ravishankar
Pradeep Poddar
Name
H C Asher
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
ABK & Associates
Deloitte Haskins & Sells LLP
Type
Cost Auditor
Statutory
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY16
FY17
FY18
MOSL
forecast
45.5
71.0
88.6
Consensus
forecast
50.4
71.3
80.0
Variation (%)
-9.7
-0.5
10.7
Source: Bloomberg
Source: Capitaline
15 February 2016
9

Disclosures
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Monsanto India
or
constitute an offer, invitation
inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to
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