Dolat Capital's research report on Sharda Cropchem
Sharda Cropchem reported a healthy Q4FY20 performance beating our estimates on all fronts. Sales/EBITDA/PAT grew by 14.7 / 5.9 / 34.1% YoY to Rs 8.75/1.63/1.41bn respectively. Gross margins improved significantly by 522bps YoY to 36.2% on account of higher margins from Europe (38.6% in Q4FY20) and better product mix. EBITDA could have been better had it not been for higher other expenses and a forex loss, taking Opex up by 94.8% YoY to Rs 1.42bn. PAT remained healthy due to a lower tax rate (the company reversed deferred tax of Rs 2.24bn in Q4FY20) and was at Rs 1.41bn.
Outlook
We are valuing Sharda Cropchem at 15.0x FY22E EPS and revise our target price to Rs 398/share. Maintain Buy.
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