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Subscribe Sharda Cropchem IPO for listing gains: GEPL Cap
GEPL Capital's report on Sharda Cropchem IPO
Sharda Cropchem offers a diversified range of formulations and generic active ingredients in fungicide, herbicide and insecticide segments for protecting different kind of crops as well as serve turf and specialty markets. In the biocide segment, the company mainly caters to disinfectants.
This is an offer for sale to give an exit opportunity to the PE investor HEP (Mauritius). The promoters are offloading shares in order to comply with SEBI regulations of minimum public shareholding.
22.6 million shares are being offered at the above price range which values the company at Rs 1300-1400 crore.
Also read: Sharda Cropchem IPO opens on Friday: Should you subscribe?
Investment Rationale
Strong Balance Sheet
The company has a strong balance sheet with healthy return ratios. Also as on FY14 the company has focused on capital efficiency & has maintained zero debt on its balance sheet. The return ratios are strong, its ROCE stands at 25 percent, while the ROE stands close to 20 percent. Also coming to the company has been able to deliver a consistent track record of profitability over the past 3 years and a 25 percent CAGR in the net income from FY12-F14.
High number of registrations
The company has a asset light model where it mainly focuses on preparing dossiers, identifying generic molecules, marketing & distributing formulations through its sales force or third party distributors. The company holds ~1200 registrations as on FY14.
Concerns are the trademark of the company is not registered, delay in registrations and increase in raw material prices.
Valuation
At the upper price band of Rs 156 the company is trading at a P/E of 13.2x on its FY14 EPS. Considering the factors like healthy financials, zero debt, asset light business model and strong distribution network, we recommend subscribe on the issue for listing gains.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Subscribe Sharda Cropchem IPO for listing gains: GEPL Cap
GEPL Capital's report on Sharda Cropchem IPO
Sharda Cropchem offers a diversified range of formulations and generic active ingredients in fungicide, herbicide and insecticide segments for protecting different kind of crops as well as serve turf and specialty markets. In the biocide segment, the company mainly caters to disinfectants.
This is an offer for sale to give an exit opportunity to the PE investor HEP (Mauritius). The promoters are offloading shares in order to comply with SEBI regulations of minimum public shareholding.
22.6 million shares are being offered at the above price range which values the company at Rs 1300-1400 crore.
Also read: Sharda Cropchem IPO opens on Friday: Should you subscribe?
Investment Rationale
Strong Balance Sheet
The company has a strong balance sheet with healthy return ratios. Also as on FY14 the company has focused on capital efficiency & has maintained zero debt on its balance sheet. The return ratios are strong, its ROCE stands at 25 percent, while the ROE stands close to 20 percent. Also coming to the company has been able to deliver a consistent track record of profitability over the past 3 years and a 25 percent CAGR in the net income from FY12-F14.
High number of registrations
The company has a asset light model where it mainly focuses on preparing dossiers, identifying generic molecules, marketing & distributing formulations through its sales force or third party distributors. The company holds ~1200 registrations as on FY14.
Concerns are the trademark of the company is not registered, delay in registrations and increase in raw material prices.
Valuation
At the upper price band of Rs 156 the company is trading at a P/E of 13.2x on its FY14 EPS. Considering the factors like healthy financials, zero debt, asset light business model and strong distribution network, we recommend subscribe on the issue for listing gains.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
LINK
http://www.moneycontrol.com/mccode/news/article/article_pdf.php?autono=1171819&num=0
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