Apply for Sharda Crop IPO for listing gains: Ajcon Global

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Sharda Cropchem (SCL) is coming out with an initial public offering (IPO) of 2.3 crore equity shares for subscription on September 5. The issue is priced at Rs 145-156 per share and the company intends to raise Rs 352 crore at the upper end of the price band.

Ajcon Global's report on Sharda Cropchem IPO

SCL is a crop protection chemical company engaged in the marketing and distribution of a wide range of formulations and generic active ingredients globally. SCL is also involved in order based procurement and supply of belts, general chemicals, dye and dye intermediates.

The company has an asset light business model whereby it focuses on identifying generic molecules, preparing dossiers, seeking registrations, marketing and distributing formulations in fungicide, herbicide and insecticide segments through third party distributors and its own sales force.

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The object of the issue is to get the benefit of listing on the bourses and to carry out the sale of the stake of the shareholders (Henderson Equity Partners (HEP) Mauritius, Sharda R Bubna and Ramprakash V Bubna).

At the upper band of the issue price, SCL is valued at 13x – FY14 Post issue EPS/share of Rs 11.85 at upper end of the price band.

With due consideration to factors like asset light business model (no manufacturing undertaken and outsourcing from China for trading); core competency in registration with strong geographic spread and portfolio; strong distribution network and sourcing capabilities; healthy revenue and PAT CAGR of 22.1 percent and 38.6 percent respectively over the period FY11-FY14; positive operating cashflow with strong balance sheet; debt free company with strong return ratios; impressive cheap valuations against Indian listed peers who are engaged in both manufacturing as well as trading of agro chemicals, makes it an attractive investment opportunity, we recommend subscribe to the issue for listing gains.

LINK

http://www.moneycontrol.com/mccode/news/article/article_pdf.php?autono=1170599&num=0