Buy Sharda Cropchem; target of Rs 412: Khambatta Securities

Khambatta Securities is bullish on Sharda Cropchem has recommended buy rating on the stock with a target price of Rs 412 in its research report dated October 27, 2021.

Broker Research

November 02, 2021 / 02:58 PM IST

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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.

Outlook

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%.

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