Sharda CropChem Ltd : A stock with Huge Potential

                            Sharda Cropchem Ltd : A stock with Huge Potential

CMP : 365-370

BSE CODE :538666

Market Cap : 3290 Crores

       LISTED ON : NSE AND BSE

TARGET : 550/600

TIME-FRAME : 12 Months

History of the Company :

Sharda Cropchem ltd was incorporated in 1987 by Mr. R V Bubna , Chemical Engineer from IIT and Mrs. Sharda R Bubna.

Today, the Company is a fast growing global agrochemicals company with leadership position in the generic crop protection chemicals industry. It has made deep inroads in the highly developed European and US markets which are characterized as high entry barrier markets. It also has a significant presence in other regulated markets such as Latin America and Rest of the World.

The Company has an asset-light business model whereby it focuses on identifying generic molecules, preparing dossiers, seeking registrations, marketing and distributing formulations through third party distributors or it's own sales force. The Company's core competence lies in developing product Dossiers and seeking product registrations in different countries. The Company not only has an extensive distribution network of third party distributors but has also setup its own sales force in various countries in Europe and in Mexico, Colombia, South Afirca and India. The Company's strategy of sourcing through a global network of suppliers provides it with flexibility and nimbleness.

The company is capable of providing a wide bouquet of products to its customers. Its product portfolio in agrochemical business comprises of formulations and generic active ingredients in fungicide, herbicide and insecticide segments for protecting different kind of crops as well as serves turf and specialty markets and in biocide segment as disinfectants thereby allowing us to offer varied range of formulations and generic active ingredients.

The product portfolio in non-agrochemical business comprises of Belts, general chemicals, dyes and dye intermediates which enables the Company to cater to varied demands. 

Main Business Activities : 

• Agro Chemicals
• Conveyor Belts
• Industrial Chemicals

Financials of the Company : 

• Profit After Tax (PAT) for the year ended on 31st March,2018 has been reported  at Rs 193 Crore and turnover at Rs 1713.34 Crore.
• As per the numbers as on 31st March,2018 the company has generated Return on Equity of approx. 22% , Return on Capital Employed of 49% and Return on Assets of 22%
• The company is a regular dividend paying company and has paid dividend for past 5 consecutive years.
• Debt to Equity ratio is below 1 and is reasonable in nature
• The company has carried out a major expansion in 2017 and still a part of expansion is pending as capital work in progress.

Investment Rationale : Why to Invest in this Stock ??

• Shareholding of the promoters in the company is 74.78% as on 30th June,2018 which strongly indicates interest of promoters in growth of the company. Mutual funds and FPIs holding remaining 21% shares. Thus, approx 4% shareholding is only available with general public.
• Market Cap to Sales Ratio : 1.80  is attractive for an Agro-chemical Company
• At current price of 365 Rs per share and EPS of 21 Rs on trailing basis , the stock is presently trading at an attractive P/E ratio of 18.
• At a forward reasonable P/E of 25 and EPS of 25.00, we expect the stock price to soar higher atleast to 600 and higher levels in coming time.

Disclaimer Note: The above is not a research report but information as available on public domain and it should not be treated as a research report. Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations.

Disclosure: It is safe to assume that I might have Sharda Crop chem Ltd  in my portfolio and hence my point of view can be biased. Readers should perform own due diligence before investing. We do not assume any responsibility or liability resulting from the use of information , judgments and opinions for Trading or Investment purposes on the Blog.