Sharda Cropchem soars to a record high, up 20% on robust Q3 earnings

Shares of Sharda Cropchem rallied 20 per cent, and in the process hit a new all-time high of Rs 454.70, in Monday’s intra-day trade in an otherwise weak market on the back of robust Q3 numbers. The company's Q3 net profit more-than-doubled to Rs 102 crore in December quarter (Q3FY22). The agrochemicals company had posted PAT of Rs 48.3 crore in a year ago quarter.

The company’s revenue grew by 78.2 per cent YoY to Rs 879.8 crore in Q3FY22 led by strong volume growth across geographies & better product mix & price realisation. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded by 220 bps YoY to 22.8 per cent in Q3 FY22 driven by economies of scale, effective cost management marginally settled off by higher freight cost.

The company’s board declared an interim dividend of Rs 3 per equity share for the financial year 2021-22. The company fixed February 2, 2022 as record date for the purpose of interim dividend. The interim dividend shall be paid or dispatched on or before March 01, 2022, the company said.

Anand Rathi Share and Stock Brokers has a ‘Buy’ rating on Sharda Cropchem with a target price of Rs 480 per share. “Powered by its focus on registering formulations and active ingredient across regions, Sharda’s strong growth would continue. A strong pipeline and distribution network would add to growth. Internally funded capex and FCF generation would strengthen its balance sheet, resulting in higher return ratios,” the brokerage firm said in its initiate coverage report dated December 30, 2021.

Its identification of off-patent high-demand molecules, high registration cost and a long gestation period in registering formulations and active ingredients are high entry barriers, the brokerage firm said.