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Subscribe to Sharda Cropchem IPO, advises Mehta Equities
Mehta Equities' report on Sharda Cropchem IPO
Sharda Cropchem is a Mumbai-based crop protection chemical company engaged in the business of marketing and distribution of a wide range of formulations and generic active ingredients globally. Sharda is also involved in orderbased procurement and supply of belts, general chemicals, dyes and dye intermediates. Over the years the company has primarily, grown organically in the field of agro chemicals and they have also recently entered into the biocide segment. Sharda is set to open its IPO of 2.3 crore equity shares and aims to raise around Rs 327-352 crore through the issue.
Investment Rationale:
Asset-light business model with core strength in registration of ingredients
The Company’s core strength lies in identifying generic molecules, preparing dossiers (documents), seeking registrations, and marketing and distributing formulations or generic active ingredients in fungicide, herbicide and insecticide segments. As on date Sharda has around 1200 registrations in hand and has also filed over 500 applications for registrations globally which are pending at different stages which acts as key barrier of entry.
Well-built distribution network
Sharda has built distribution network of its formulations and generic active ingredients through third-party distributors based in Europe, NAFTA, Latin America and the Rest of the World.
Healthy financials
Sharda is a debt-free with strong return ratios. The company has demonstrated a steady track record of profitability over the last three years and a 25 percent compounded annual growth in the net income over FY2012-14. Profitability margin has been maintained in the range of 17-20 percent (Operating) in past 5 years and 8-13 percent on profit margins, which is higher & better than any other peers in the listed space. It has strong return on capital employed (RoCE) of 25 percent and return on equity (RoE) of close to 20 percent.
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We believe Sharda Cropchem provides investor an opportunity to invest in the growing crop protection chemical company. Considering the above rationale & valuation parse this issue is reasonable priced when compared with other listed entities which are trading in the higher PEx range (25x-30x). On overall valuations at the upper band of the price Rs 156, the stock trades at 13x which is almost 50 percent lower as compared to its peers domestically like PI Industries and Rallis India. We believe with healthy growth in the agro chemical industry globally, Sharda is well placed to tap the opportunity. Hence, we advice investors should subscribe to this IPO.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Subscribe to Sharda Cropchem IPO, advises Mehta Equities
Mehta Equities' report on Sharda Cropchem IPO
Sharda Cropchem is a Mumbai-based crop protection chemical company engaged in the business of marketing and distribution of a wide range of formulations and generic active ingredients globally. Sharda is also involved in orderbased procurement and supply of belts, general chemicals, dyes and dye intermediates. Over the years the company has primarily, grown organically in the field of agro chemicals and they have also recently entered into the biocide segment. Sharda is set to open its IPO of 2.3 crore equity shares and aims to raise around Rs 327-352 crore through the issue.
Investment Rationale:
Asset-light business model with core strength in registration of ingredients
The Company’s core strength lies in identifying generic molecules, preparing dossiers (documents), seeking registrations, and marketing and distributing formulations or generic active ingredients in fungicide, herbicide and insecticide segments. As on date Sharda has around 1200 registrations in hand and has also filed over 500 applications for registrations globally which are pending at different stages which acts as key barrier of entry.
Well-built distribution network
Sharda has built distribution network of its formulations and generic active ingredients through third-party distributors based in Europe, NAFTA, Latin America and the Rest of the World.
Healthy financials
Sharda is a debt-free with strong return ratios. The company has demonstrated a steady track record of profitability over the last three years and a 25 percent compounded annual growth in the net income over FY2012-14. Profitability margin has been maintained in the range of 17-20 percent (Operating) in past 5 years and 8-13 percent on profit margins, which is higher & better than any other peers in the listed space. It has strong return on capital employed (RoCE) of 25 percent and return on equity (RoE) of close to 20 percent.
View
We believe Sharda Cropchem provides investor an opportunity to invest in the growing crop protection chemical company. Considering the above rationale & valuation parse this issue is reasonable priced when compared with other listed entities which are trading in the higher PEx range (25x-30x). On overall valuations at the upper band of the price Rs 156, the stock trades at 13x which is almost 50 percent lower as compared to its peers domestically like PI Industries and Rallis India. We believe with healthy growth in the agro chemical industry globally, Sharda is well placed to tap the opportunity. Hence, we advice investors should subscribe to this IPO.
�� 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=1171840&num=0
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