Khambatta Securities has given Buy recommendation for Sharda Cropchem with a target price of Rs. 412 in its research report issued on Oct 27, 2021
Khambatta Securities’ research report on Sharda Cropchem
Led by strong volume growth across geographies, Sharda Cropchem Limited (SCL) has reported Top-line growth of 51.3% y-o-y. The Operating Revenue for the quarter ended September 21 stands at ₹ 643 crores v/s ₹425 crores in same quarter last year. Sequentially the revenues have seen a growth of 3.2%. EBITDA surged by 76.8% yo-y from ₹58.7 crores in Q2FY21 to ₹103.8 crores in 2QFY22. Better cost management, volume growth and change in product mix have led to expansion in the EBITDA margins by 233 bps y-o-y to 16.1% in Q2FY22. The Net Profit has jumped by ~68% y-o-y to ₹32 crores in 2QFY22 from ₹19 crores reported in the same quarter last year. The net profit margin for the quarter has witnessed a marginal improvement of ~50 bps y-o-y and declined by 113 bps q-o-q. Agrochemicals to Non-Agrochemicals revenue mix stood at 78:22 in Q2FY22 v/s 81:19 in 2QFY21.
We maintain our BUY rating on the stock, assigning a target P/E multiple of 12x FY24E EPS. We value SCL at ₹ 412 with an upside of 33%.