 "Sharda Cropchem rallies 18% in 2 days on strong Q2 numbers; hits 52-wk high")
Shares of Sharda Cropchem (SCL) hit a 52-week high of Rs 704, as they rallied 8 per cent on the BSE in Tuesday’s intra-day trade in an otherwise weak market. In two days, the stock of the pesticides and agrochemicals company has surged 18 per cent after it reported a consolidated profit after tax of Rs 42.40 crore in the second quarter ended September 2024 (Q2FY25), on the back of strong operational performance. It had posted a net loss of Rs 27.60 crore in the year-ago quarter (Q2FY24). At 10:20 AM, the stock was trading 4 per cent higher at Rs 685 on the BSE. In comparison, the BSE Sensex was down 0.4 per cent.
SCL is a fast-growing global agrochemicals company operating in the generic crop protection chemicals industry. Its vast and growing library of dossiers and intellectual property rights (IPR) provides it with a solid foundation for growth in the global marketplace, especially in advanced markets such as Europe, North America, and Latin America. SCL offers a diverse range of products, including fungicides, herbicides, insecticides, and biocides, to a global clientele.
In Q2FY25, SCL’s revenue grew 34 per cent year-on-year (Y-o-Y) to Rs 776.90 crore, against Rs 580.80 crore in Q2FY24, primarily driven by higher volumes and a gradual price increase. Earnings before interest, taxes, depreciation, and amortisation (Ebitda) more-than-doubled to Rs 84.8 crore, from Rs 37.7 crore in the previous-year quarter. Ebitda margin, meanwhile, improved 440 bps Y-o-Y to 10.9 per cent.
The company's management said the company saw volume growth across all regions, with Europe and North American Free Trade Agreement (NAFTA) participant countries being key contributors. Agrochemical volumes grew by 24.6 per cent in Q2FY25 and by 36.0 per cent in H1FY25. The management is optimistic about improving gross margins moving forward., as they anticipate a combination of volume growth and pricing power to drive revenue growth in the coming quarters.
Further, volume growth in agrochemicals was facilitated by the availability of products, allowing the company to meet customer demand promptly. The decline in the non-agrochemicals segment, meanwhile, was influenced by increased freight charges and disturbances in the Red Sea affecting travel time. However, the cost and time involved in registering new products have proven beneficial, leading to less competition, SCL said in its FY24 annual report.
The company said it aims to invest in product registrations, leveraging market presence and execution capabilities, as a growing global population and increasing middle-class demand for food and protein is expected to drive the need for greater agricultural productivity.