Buy Sharda Cropchem; target of Rs 1200: Anand Rathi

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Favourable product mix: Higher contribution of new-age molecules is expected to aid margin expansion, despite temporary weakness in Europe.
  • Robust registration pipeline: Strategic investment in registrations over the last few years is likely to translate into sustainable growth, with a yearly capex of ~Rs5.5-6bn.
  • Volume growth: The management expects ~10% y/y volume growth, driven by market share gain and better operational efficiency.
  • Compelling valuations: The stock trades at an attractive valuation of 9/8x FY27/28e EPS, with a robust net cash balance sheet and healthy return ratios.

Thesis Validation Checklist

To validate the investment thesis, investors should watch for: (1) volume revival in Europe, (2) margin expansion driven by favourable product mix, (3) progress in registration pipeline, and (4) maintenance of robust return ratios. Key risks include extended Middle East conflicts, delay in securing registrations, and adverse forex movement.