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Nirmal Bang's report on Sharda Cropchem IPO
Sharda Cropchem (SCL) is a crop protection chemical company engaged in the marketing and distribution of a wide range of formulations and generic active ingredients globally. It is also involved in order based procurement and supply of Belts, general chemicals, dyes and dye intermediates.
Sharda Cropchem is a cash rich company (Rs 190 crore in FY14). It is coming out with IPO to provide an exit option to its PE investors, HEP Mauritius, who invested Rs 100 crore in March’14 for 15.87 percent stake. Also, to comply with SEBI guidelines of 75 percent, promoter is also offering shares in the IPO. Hence, there is no new issue of shares and equity would remain same post issue.
Investment rationales are its core competency in registration, geographical spread with strong distribution network and strong balance sheet.
However, key concerns are high working capital cycle, high investment in registrations and currency risk.
Valuation and Recommendation
Between FY10-14 SCL’s revenues grew at CAGR of 22 percent while EBIDTA grew at a CAGR of 23.9 percent and PAT by 38.6 percent. We expect it to maintain 20-25 percent growth going forward.
On the valuation front, at the given price band of Rs 145-Rs 156, SCL is commanding at PE of 12.2x – 13.2x its FY14 EPS of Rs 11.8/sh and EV/EBIDTA of 8.6-7.9x. Considering the healthy balance sheet, strong double digit growth and cushion in valuations we recommend subscribing the issue for both short term and long term gains
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Nirmal Bang's report on Sharda Cropchem IPO
Sharda Cropchem (SCL) is a crop protection chemical company engaged in the marketing and distribution of a wide range of formulations and generic active ingredients globally. It is also involved in order based procurement and supply of Belts, general chemicals, dyes and dye intermediates.
Sharda Cropchem is a cash rich company (Rs 190 crore in FY14). It is coming out with IPO to provide an exit option to its PE investors, HEP Mauritius, who invested Rs 100 crore in March’14 for 15.87 percent stake. Also, to comply with SEBI guidelines of 75 percent, promoter is also offering shares in the IPO. Hence, there is no new issue of shares and equity would remain same post issue.
Investment rationales are its core competency in registration, geographical spread with strong distribution network and strong balance sheet.
However, key concerns are high working capital cycle, high investment in registrations and currency risk.
Valuation and Recommendation
Between FY10-14 SCL’s revenues grew at CAGR of 22 percent while EBIDTA grew at a CAGR of 23.9 percent and PAT by 38.6 percent. We expect it to maintain 20-25 percent growth going forward.
On the valuation front, at the given price band of Rs 145-Rs 156, SCL is commanding at PE of 12.2x – 13.2x its FY14 EPS of Rs 11.8/sh and EV/EBIDTA of 8.6-7.9x. Considering the healthy balance sheet, strong double digit growth and cushion in valuations we recommend subscribing the issue for both short term and long term gains
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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LINK::
http://www.moneycontrol.com/mccode/news/article/article_pdf.php?autono=1171801&num=0
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