Buy Sharda Cropchem; target of Rs 435: Khambatta Securities

Khambatta Securities' research report on Sharda Cropchem

Sharda Cropchem Limited (SCL) is a rapidly growing global agrochemicals company with a leadership position in generic crop protection chemicals comprising formulations and generic active ingredients (AIs) in the fungicide, herbicide and insecticide segments. An expanding global population, the need for food and nutritional security, and a decline in availability of arable land due to urbanisation and industrialisation will drive demand for agrochemicals globally. A wide range of products, geographically diversified revenue mix, and a robust global distribution model are SCL’s key strengths. Accounting for 86% of overall revenues, 93% of agrochemicals sales came in from Europe and the Americas (Europe ~50%, NAFTA ~35%) in FY21.

Outlook

At current levels, the SCL stock trades at an attractive 11.0x FY23E EPS. Assigning a target P/E multiple of 15.0x FY23E EPS, we value SCL at Rs 435, informing a BUY rating with an upside of 36%.

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