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Sharda cropchem ipo
1. 1 | P a g e
Sharda Cropchem IPO Report
WealthRays Research Desk
Sharda Cropchem IPO Report 3rd September, 2014
About company: The company is a crop protection chemical company engaged in the marketing and distribution of a wide range of formulations and generic active ingredients globally. They are also involved in order based procurement and supply of Belts, general chemicals, dyes and dye intermediates. Over the years, they have, primarily, grown organically and their core strength lies in identifying generic molecules, preparing dossiers, seeking registrations, marketing and distributing formulations or generic active ingredients in fungicide, herbicide and insecticide segments. [Source: Product note] Strengths The object of offer is dilute promoters stake and company won’t receive any proceeds from the IPO. The company has a huge presence worldwide but most revenue comes from Euro area. Registrations of products are the strength of company also it has plans to add more registrations across the world for its products. This diversified portfolio across the world is core competency as the business is highly regulated. Thus its advantage of asset light business is offset by its reliance on third party distribution. On financials RONW is 19.34% for FY14 is strong as the assets are lower and on this strength, EBIDTA margin of the company is strong. Pending registrations and its expansion in sales force to reduce dependency on third party is key on sustaining and strengthening its strong financials. Recent entry into biocide segment is also positive for the company. Outlook on IPO Rise in use of biotech products and organic products poses risk for the company’s portfolio. Top ten agrochemical contributes heavily in revenue of the company. As the company has diversified portfolio geographically, currency risks are high. Any volatility in currency will directly affect their top line as most revenue comes from Euro area. The company has good reserves of Rs. 465.524 crores as of March 31st, 2014 with a high current ratio of 1.96 which is strong. Cash flows of the company are strong as good reserves are built. The company has been showing growth in its top line at CAGR of 32.23% from FY10 to FY14 with major income coming from operations. EPS of the company is on a rise from FY10 to FY14 on back of strong margins. Its peer UPL which also relies on third party is trading at 14.06 PE. Sharda Cropchem share is valued in range of 12.24-13.17 PE for price band of 145-156. Stable CAGR can be expected for the company as it has many registrations pending in pipeline and plans to make strategic acquisitions. Financials of the company are strong but focus should be on further addition of registrations and how the company mitigates currency risks and increases its presence in other segments like biocide. We advise a subscribe on the offer for a medium term investment, which can be held for longer term depending company’s expansion plans.
Research Desk WealthRays Securities Pvt Ltd RegdOffice :WealthRays Securities Private Limited, 1654, 1stfloor, HAL 3rdStage, Jeevanbimanagar, Bangalore-560075 Enquires:08049203300 | URL – www.wealthrays.com -------
2. 2 | P a g e
Sharda Cropchem IPO Report
WealthRays Research Desk
Sharda Cropchem IPO Report 3rd September, 2014
Disclaimer
The information and views presented in this report are prepared by WealthRays Securities Private Limited (hereinafter called WealthRays). The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither WealthRays nor any person connected with any associate companies of WealthRays accepts any liability arising from the use of this information and views mentioned in this document. For any queries write to research@wealthrays.com. WealthRays Securities Private Limited, Trading member of Madras Stock Exchange, NSE Cash Segment - SEBI Regn No. INB041423139 | NSE F&O Segment - SEBI Regn No. INF041423139 | WealthRays Commodities Trading Private Limited, Trading member of National Spot Exchange, Membership No. 57780 |
![1 | P a g e
Sharda Cropchem IPO Report
WealthRays Research Desk
Sharda Cropchem IPO Report 3rd September, 2014
About company: The company is a crop protection chemical company engaged in the marketing and distribution of a wide range of formulations and generic active ingredients globally. They are also involved in order based procurement and supply of Belts, general chemicals, dyes and dye intermediates. Over the years, they have, primarily, grown organically and their core strength lies in identifying generic molecules, preparing dossiers, seeking registrations, marketing and distributing formulations or generic active ingredients in fungicide, herbicide and insecticide segments. [Source: Product note] Strengths The object of offer is dilute promoters stake and company won’t receive any proceeds from the IPO. The company has a huge presence worldwide but most revenue comes from Euro area. Registrations of products are the strength of company also it has plans to add more registrations across the world for its products. This diversified portfolio across the world is core competency as the business is highly regulated. Thus its advantage of asset light business is offset by its reliance on third party distribution. On financials RONW is 19.34% for FY14 is strong as the assets are lower and on this strength, EBIDTA margin of the company is strong. Pending registrations and its expansion in sales force to reduce dependency on third party is key on sustaining and strengthening its strong financials. Recent entry into biocide segment is also positive for the company. Outlook on IPO Rise in use of biotech products and organic products poses risk for the company’s portfolio. Top ten agrochemical contributes heavily in revenue of the company. As the company has diversified portfolio geographically, currency risks are high. Any volatility in currency will directly affect their top line as most revenue comes from Euro area. The company has good reserves of Rs. 465.524 crores as of March 31st, 2014 with a high current ratio of 1.96 which is strong. Cash flows of the company are strong as good reserves are built. The company has been showing growth in its top line at CAGR of 32.23% from FY10 to FY14 with major income coming from operations. EPS of the company is on a rise from FY10 to FY14 on back of strong margins. Its peer UPL which also relies on third party is trading at 14.06 PE. Sharda Cropchem share is valued in range of 12.24-13.17 PE for price band of 145-156. Stable CAGR can be expected for the company as it has many registrations pending in pipeline and plans to make strategic acquisitions. Financials of the company are strong but focus should be on further addition of registrations and how the company mitigates currency risks and increases its presence in other segments like biocide. We advise a subscribe on the offer for a medium term investment, which can be held for longer term depending company’s expansion plans.
Research Desk WealthRays Securities Pvt Ltd RegdOffice :WealthRays Securities Private Limited, 1654, 1stfloor, HAL 3rdStage, Jeevanbimanagar, Bangalore-560075 Enquires:08049203300 | URL – www.wealthrays.com -------](https://image.slidesharecdn.com/shardacropchemipo-141110011001-conversion-gate02/85/Sharda-cropchem-ipo-1-320.jpg?cb=1415582134)
