Sharda Cropchem Q4 Results Review - Weak Market Conditions Could Pose Some Near-Term Challenges: Dolat Capital
Recovery in Europe to drive growth in FY24.
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Dolat Capital Report
Sharda Cropchem Ltd.'s revenues grew by 3.3% YoY to Rs 14.8 billion (our estimate: Rs 16.4 billion) with gross margins expanding by 235 basis points YoY to 31.6% driven by higher sales in Europe.
Ebitda grew by 9.6% YoY to Rs 3.2 billion (our estimate: Rs 3.4 billion) translating to an Ebitda margin expansion of 124 bps to 21.5%.
Profit after tax grew by 13.4% YoY to Rs 2 billion (our estimate: Rs 1.8 billion) benefitting from a lower depreciation charge (down 5.7% YoY).
We believe that despite near term concerns Sharda Cropchem will be able to achieve its guided revenue and margin target for FY24 largely led by improved performance in its largest region of Europe. We like Sharda Cropchem on account of its-
asset light model,
strong product registrations (2,821 products registered with 1,143 products in the pipeline),
strong presence in regulated markets,
highly flexible operating model and widespread distribution network.
We have broadly maintained our estimates for FY24/FY25, which are largely in line with the guidance provided by the company.
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