Dolat Capital recommended Accumulate rating on Sharda Cropchem with a target price of Rs 415 in its research report dated May 15, 2019.
Dolat Capital's research report on Sharda Cropchem
Sharda Cropchem (SHCR)’s sales/EBITDA/PAT declined 0.2/20.2/6.7% YoY to ` 7.64/1.54/1.05bn, respectively, in 4QFY19. The gross margin contracted 340 bps YoY, as an explosion in a chemical park in China in March-19, created supply shortage and increased raw material prices. Sales de-growth of 0.2% YoY was on account of a volume de-growth of 21.1%, value growth of 16.7% and forex led growth of 4.2%. SHCR has virtually no debt on its balance-sheet (net cash of ` 3.35bn as on 31st March-19). Sales from Europe and NAFTA grew 4.7/15.6% YoY to ` 3.7/` 2.5bn, respectively, in 4QFY19. However, Sales from LATAM and rest of the world de-grew 46.8/51.4% YoY to ` 255/331mn, respectively, in 4QFY19.
We estimate a sales/EBITDA/PAT growth of 15.5/26.7/16.3% in FY20E and 15.6/20.8/22.8% in FY21E, respectively. We resume coverage on Sharda cropchem with an Accumulate rating, and a TP of ` 415 (15.0x FY21E EPS of ` 27.7).
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