We trim our FY24/25/FY26E estimates by 11%/12%/12% and revise TP to Rs470 (earlier Rs540) based on 12XFY26 EPS, citing near-term pressures on both revenue & margin led by adverse weather condition in key geographies plus high inventory concerns at manufacturer & distributor levels. Sharda Cropchem (SHCR) reported subdued results with revenue decline of 20% YoY to Rs5.8bn (PLe Rs7.9bn), led by volume/price growth of +20%/-45%YoY partially aided by positive FX variance of 5.0% YoY. Gross margins contracted 230bps YoY to 25.1% largely led by a) high cost inventory provisions of Rs130mn; b) higher sales return of Rs700mn; and c) acute pressure on price realizations (declined to the tune of 35-40%) particularly in the NAFTA region.
OutlookLower GM coupled with higher opex up 570bps YoY has resulted in EBITDA contraction at Rs349mn as against Rs1.4bn in 2QFY23 (incl. IU&AD write-off of Rs28mn in 2QFY24 v/s Rs15mn in 2QFY23). Maintain ‘ACCUMULATE’ rating.
For all recommendations report, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sharda Cropchem - 25 - 10-2023 - prabhuDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
