sharda cropchem - initiating coverage-sep-15-edelbreport.myiris.com/es1/shacropc_20150903.pdf ·...

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Sharda Cropchem (SCC) pursues a differentiated asset‐light business model underpinned by focus on product registrations. Robust 47.2% CAGR (FY10‐15) in registration in stringent regulation geographies coupled with strong sourcing capabilities reinforce its execution credentials. Moreover, SCC is on cusp of exponential surge riding multiple triggers—rising wallet share in existing products and new launches further bolstered by expansion of in‐house sales team. We estimate revenue and PAT CAGR of 19.2% and 18.8% over FY15‐17 (FY10‐15 CAGR of 24.7% and 37.4%), respectively, with ex‐cash RoE/RoCE of >25% riding these multiple levers. We perceive re‐rating potential in light of strong product registration‐led growth, net cash balance sheet and return ratios. Initiate coverage with ‘BUY’ and target price of INR400.

Unique business model; successfully cracking stringent markets

The agrochemical industry is highly regulated across markets and registration acts as a

strong entry barrier. SCC’s product registrations and outsourced manufacturing based

business model ensures flexibility and nimble, asset‐light & low capital investments.

Bolstered by vibrant experience and requisite knowledge, the company has bagged

product registrations in stringent regulation geographies, primarily Europe and US.

Highly regulated markets entail superior margins on account of limited competition,

handsomely brightening SCC’s prospects.

Emerging global player riding multiple growth levers

The company (current share 0.28%) is tightening its girdle to corner a larger pie

(0.37%) of the USD60bn agrochemical market via aggressively registering products

across geographies. We perceive potent triggers that will propel SCC into higher

growth orbit: (1) rising wallet share in existing products; (2) new launches; and

(3) supported by expansion of in‐house sales team.

Outlook and valuations: Emerging entity; initiating with ‘BUY’

SCC is at an inflection point wherein multiple factors will trigger growth. We believe

the best is yet to come given the potent registration capability and rising participation

in the burgeoning agrochemical industry. Despite robust growth, balance sheet and

RoE/RoCE, the stock is trading at a discount to peers. Hence, we believe valuation re‐

rating is imminent. We value it at P/E of 18x FY17E and initiate coverage with ‘BUY’.

INITIATING COVERAGE

SHARDA CROPCHEMDivergent play

EDELWEISS RATINGS

Absolute Rating BUY

Investment Characteristics Growth

MARKET DATA (R: NA, B: SHCR IN)

CMP : INR 294

Target Price : INR 400

52‐week range (INR) : 408 / 217

Share in issue (mn) : 90.2

M cap (INR bn/USD mn) : 27 / 400

Avg. Daily Vol. BSE/NSE (‘000) : 629.6

SHARE HOLDING PATTERN (%)

Current Q4FY15 Q3FY15

Promoters *

75.0 75.0 75.0

MF's, FI's & BKs 12.6 13.5 14.7

FII's 7.0 5.7 3.9

Others 5.4 5.8 6.4

* Promoters pledged shares (% of share in issue)

: NIL

PRICE PERFORMANCE (%)

Sensex Stock

Stock over Sensex

1 month (9.7) (15.0) (5.3)

3 months (5.2) (5.0) 0.2

12 months (6.2) 26.9 33.1

Manish Mahawar +91 22 6623 3481

[email protected]

(Click on image for video)

Damodaran Kutty +91 22 6623 3302

[email protected]

India Equity Research| Miscellaneous

September 3, 2015

Financials

Year to March FY14 FY15 FY16E FY17E

Revenues (INR mn) 7,904 10,611 12,159 15,077

EBITDA (INR mn) 1,543 1,895 2,213 2,865

Adjusted Profi t (INR mn) 929 1,416 1,533 2,000

Adjusted Di luted EPS (INR) 10.3 15.7 17.0 22.2

Di luted P/E (x) 28.6 18.7 17.3 13.3

EV/EBITDA (x) 16.2 13.4 11.3 8.6

ROAE (%) 18.2 23.4 21.3 23.2

https://www.edelresearch.com/webcast/webcast_new.aspx?Id=29931&Type=ynaj9XvqmJoptbYzJzovtA==

Miscellaneous

2 Edelweiss Securities Limited

Investment Rationale

Unique asset light business model lends flexibility

SCC, a generics agrochemical company, follows a differentiated asset‐light business model

focusing on product registrations and outsourced manufacturing. It operates in formulations

and active ingredients solely based on generic (off‐patent) molecules which have been in

use in the past, precluding investment of time and capital in basic and applied research. This

differentiates it from an innovator company which expends capital, time and resources

primarily towards R&D.

Fig. 1: Core focussed on product registrations and marketing

Source: Company, Edelweiss research

Basic andapplied research

Identification RegistrationActive ingredientmanufacturing

Formulation& Packaging

Marketing& Distribution

Avoids capital andtime intensitvebasic research

Agro‐climaticknowledge of localconditions andmarket potentialdrives theidentification ofnew registrationopportunities

Regulatoryknowledge indifferent countries

Investment inregistrations anddossierpreparation

Key step to accessand sell productsin mostgeographies

Manufacture ofactive ingredient isoutsourced to awidemanufacturerbase; portfolioexpansion is easier

Intense focus onregistration basedformualtionsrather thanbuildingmanufacturingassets

Certain productsare formulatedand packed closeto customerlocations inUnited States andEurope

Global presencethrough extensivedistributionnetwork

Setting up of salesforce

SCC’s differentiated asset‐light business model, focusing on product registrations

and outsourced manufacturing ensures flexibility and helps offer a vibrant range

of products in a timely manner.

Over the years, SCC has successfully navigated the regulatory quagmire in various

geographies, equipping it to anticipate potential issues and comply with

regulatory requirements efficiently.

The company is on cusp of exponential surge riding multiple triggers—rising

wallet share in existing products and new launches further bolstered by

expansion of in‐house sales team.

SCC has refrained from acquisitions or inorganic growth over the years. The

company has built its business in tough regulatory environments via investments

in registrations funded primarily via internal accruals.

The company’s market share is likely to shoot up to 0.37% (currently 0.28%)

assuming the global agrochemical market clocks 3% CAGR over FY15‐17.

Mr. Ashish Bubna Whole‐time Director

We believe this diversification in

terms of geographies and

product portfolio reduces risks of

adverse market, seasonal

conditions or concentration and

dependence on a single

jurisdiction

Sharda Cropchem


Fig. 2: SCC versus traditional business model

SCC`s business model Traditional business model

Source: Edelweiss research

The company proceeds directly with preparation of dossiers and seeks registrations after

identifying opportunities in generic (off‐patent) molecules and corresponding

formulations/active ingredients. During this identification process, SCC weighs several

factors including competition, margins, entry barriers, market size, ability to leverage it

across jurisdictions globally, marketing and the time involved to seek registrations. It then

procures formulations and generic active ingredients in the finished form from third party

manufacturers for onward sale. The company has formidable sourcing capabilities in China

anchored by decade old quality suppliers.

Fig. 3: Flexibility led by outsourced manufacturing


This, we believe, ensures flexibility and helps SCC offer a vibrant range of formulations as

well as generic active ingredients in a timely manner. Further, the strategy ensures a nimble,

asset‐light and low‐capital investment approach, which is both downturn resistant and

highly scalable. Moreover, it also equips the company to respond to customer needs,

expand business without significant additional fixed costs and quickly capitalise on new

dynamics/industry opportunities.

Sourcing

Active Ingredient

Formulation

(Entirely from Chinafor all geographies)

Europe & U.S.(Formulatedthrough local

players)

Latam / RoW

Formulated in China

Sales Sales Sales

Differentiated business model

ensures a nimble, asset‐light and

low‐capital investment approach,

which is both downturn resistant

and highly scalable

Miscellaneous


Despite subscribing to a asset‐light business model based on product registration and

outsourced manufacturing, SCC’s margins, RoE and RoCE are at par with peers. We believe a

significant proportion of revenue comes from Europe/US which are highly regulated

markets and offer limited competition.

Table 1: Quality financials despite no manufacturing


Successfully received registration on extensive domain knowledge

The agrochemical industry is highly regulated across markets and registration is an indelible

vital element of the business. Before any active ingredient (AI) or a formulated product is

sold in any country, it must receive approval or registration from relevant authorities to

verify its efficacy, safety and environmental impact for each specific crop application. This

process is expensive, time consuming and requires specific knowledge of the local

regulatory framework across local jurisdictions, regions and countries.

Further, registration is a long drawn process in difficult regulatory geographies such as

Europe and the US, which follow stringent product and environmental safety norms. In

addition, every country in EU requires specific registration for each formulation. Stricter

efficacy, safety and data requirements recently have ballooned costs of field trials and

heightened risks of commercialisation failure.

Given the complexity of the registration process which typically takes more than 4 years to

complete, EU is the toughest generics market. In EU, average cost is EUR7‐8mn per product

to register the products in first country. However, cost will be less than Euro1mn to register

the same products in subsequent countries as players have to do only few trails or tests.

Gross

Margin

(%)

EBITDA

Margin

(%)

ROE

(%)

ROCE

(%)

Sharda Cropchem 33.1 17.9 23.4 30.3

UPL 50.2 19.5 20.7 21.6

Bayer Cropscience 35.2 13.8 20.3 30.6

Rall is India 45.4 15.5 21.1 26.9

Dhanuka Agritech 37.7 17.3 28.5 33.0

P. I. Industries 42.5 29.0 29.3 37.9

FY15Manufacturing

of Formulation

Manufacturing

of active

Ingredients

Companies

Despite being outsourced

manufacturing, SCC’s margins,

RoE and ROCE are at par with the

peers

In EU, average cost is EUR7‐8mn

per product to register the

products in first country.

However, cost will be less than

Euro1mn to register the same

products in subsequent

countries.

Sharda Cropchem


Fig. 4: Registrations—Expensive and time consuming process


Over the years, SCC has successfully navigated the regulatory quagmire in various

geographies, equipping it to anticipate potential issues and comply with regulatory

requirements efficiently. The company taps into its experienced pool of consultants who

have the requisite knowledge regarding the application process followed in their respective

countries, which underscores SCC’s registrations success.

The company has successfully obtained registrations in Europe, US and has recently

ventured into Canada as well. In the highly regulated Europe market, the number of the

company’s registrations has catapulted from 40 in FY10 to 623 in FY15, a robust 73.2%

CAGR. Further 335 registrations are in the pipeline as on June, 30 2015.

Compliance Data

Toxicity

Physical

Physio Chemical

Chemical

Field Trials

Biological

Risks

Dossier

GLP Certified Laboratories Approached for Testing

Tests

Identification of relevant formulation or generic AI

Examination of data & studies conducted forapplication submission for registration in the relevantjurisdiction

In case the data is readilyavailable, agreements are

entered into with data holdersfor use

In case, the data is notavailable one has to undertake

relevant studies or tests

Toxicity

Physio ChemicalTesting

Field Trials

Risks / 5 BatchAnalysis

Determination of possible adverse effectson humans

Determine physical properties like density,pH and stability

Testing on crops cultivated in differentclimatic conditions, seasons & soilconditions

Tests purity & profiles the impurities Test are conducted in compliance with norms laid down by EPA, OECD,DG SANCO

1 2

Over the years, SCC has

successfully navigated through

the regulatory quagmire in

various geographies

Miscellaneous


Chart 1: Successfully bagged registrations in highly regulated markets


Limited competition renders highly regulated markets of Europe and US superior margin

geographies—gross margins in Europe and US are 50‐60% and 40‐50%, respectively,

versus 25‐35% in other geographies. On account of higher contribution of Europe and

NAFTA, SCC enjoys at par/premium gross/EBITDA margin versus peers despite having no

manufacturing.

Multiple levers to propel growth

SCC has clocked 24.7% revenue CAGR over FY10‐15 and estimates to achieve revenue CAGR

of 19.2% over FY15‐17. We believe the company has the following potent triggers at its

disposal which will propel it into a higher growth orbit:

(1) Rising wallet share in existing products.

(2) New product launches.

(3) Supported by expansion of in‐house sales team.

Rising wallet share in existing products

SCC has a minuscule market share in individual products currently. However, the company is

aggressively filing registrations across geographies considering the large opportunity of

global molecules. E.g., in Imidacloprid, one of the largest selling insecticides worldwide, SCC

has miniscule market share of 0.9% currently which is likely to jump in years to come.

In its top 10 products, SCC’s market share is in a paltry 0.5‐7.0% range. According to the

company, these products have market potential of INR350bn (~10% of global agrochemical

market). Hence, SCC has ample scope to improve market share in these products over the

next 3‐4 years by aggressively enhancing registrations in new geographies and competitive

pricing. Further, the company has currently registered existing products in only a few crops

and is targeting to extend (label extension) them to various crops across geographies. Top

10 products contribute ~60% to SCC’s agrochemical sales.

Management believes that revenue from existing products portfolio is likely to grow at

CAGR of 10%, out of 20‐25% of overall revenue growth over next 3‐5 years.

100

400

700

1,000

1,300

1,600

FY10 FY11 FY12 FY13 FY14 FY15(No of registrations)

Europe LATAM NAFTA RoW

Highly regulated markets enjoy

superior margins as present in

limited competition geographies

In its top ten products, SCC has

market share in the range of

mere 0.5%‐7%. According to

company, these products have

market potential of INR350bn

(~10% of global agrochemical

market).

Sharda Cropchem


Chart 2: Ample head room to enhance market share in large global products


Note: Above chart is based on FY13 data

SCC’s agrochemical operations are spread over 76 countries across Europe, NAFTA, Latin

America and Rest of the World (RoW), offering a diversified range of formulations and

generic active ingredients in fungicide, herbicide, insecticide and biocide segments. Europe,

Latin America, NAFTA (Non American Free Trade Agreement) and RoW contributed 51%,

17%, 20% and 12% to the company’s FY15 agrochemical’s revenue, respectively.

Chart 3: Europe–Growth geography and key contributor (FY15)


Despite the complexity of the registration process in EU, SCC has successfully bagged 683

registrations in Europe and has a strong pipeline of 335 registrations as on June 30, 2015.

Europe will continue to be key focus geography. SCC also intends to explore opportunities in

new markets such as Africa, Central America and Japan by leveraging its knowledge of the

generic agrochemical markets, existing dossiers and seek registrations in these markets for

distributing existing portfolio of formulations and generic active ingredients. The company

will continue to put in efforts for increasing presence in countries such as Canada where it

does not have major operations, by launching new products. Further, SCC has filed a couple

Imidacloprid

Paraquat

2,4 D Acid

Chlorpyriphos Tebuconazole

AcephateNicosulfuron

Diquat

Quizalofop

Metaldehyde0

200

400

600

800

1,000

0.0 1.5 3.0 4.5 6.0 7.5

Market size (U

SD mn)

Market share (%)

Europe51%

NAFTA20%

Latin America17%

RoW12%

Europe will continue to be key

focus geography. SCC also

intends to explore opportunities

in new markets

We believe there is ample room

for SCC to enhance its wallet

share riding its currently marginal

market share across geographies

and robust registration pipeline

Miscellaneous


of registrations in large markets like Brazil and India, where it does not have significant

presence.

We believe there is ample room for SCC to enhance its wallet share riding its currently

marginal market share across geographies and robust registration pipeline.

New product launches

Currently, SCC has a product portfolio of 68, of which 38 are matured. Hence, balance 30

products have yet to be registered in many geographies. Further, it has a launch pipeline of

12‐14 products over the next 3‐4 years. Based on management estimates, these products

have opportunity size of >USD1bn globally.

Further, the company is sharpening focus on strengthening its “registration capabilities”. It

has ~50‐60 consultants along with 18‐20 employees across various geographies for product

registrations. As on June 30, 2015, the company had a pipeline of 726 registrations across

geographies.

Management believes that revenue from new products launches is likely to grow at CAGR of

10‐15%, out of 20‐25% of overall revenue growth over next 3‐5 years.

Chart 4: Registration pipeline firming up


0

180

360

540

720

900

As on Sept 30, 2014

As on Dec 31, 2014 As on March 31, 2015

As on June 30,2015

(No of registrations)

Europe NAFTA LATAM RoW

SCC has launch pipeline of 12‐14

products over next 3‐4 years,

entailing >USD1bn opportunity

SCC had a pipeline of 726

registrations across geographies

as on June 30, 2015

Sharda Cropchem


Expansion of in‐house sales team to bolster growth

Marketing and distribution are an integral part of the agrochemical value chain. Currently,

SCC is primarily dependent on third party distributors based in Europe, NAFTA, Latin

America and RoW for distribution of formulations and active ingredients. However, the

company is expanding its own sales force comprising employees and consultants in various

countries in Europe as well as in Mexico, Columbia, South Africa, India and other

geographies, in addition to third party distributors. Since 2010, SCC has increased its sales

force to over 100 globally. Currently, it is selling only 10% of revenue via its own sales force.

We believe this will enable SCC to increase margin and portfolio penetration as well as serve

efficiently. We believe, while overhead cost is higher in case of third party distributors,

inventory requirement is lower versus own distribution. This leads to lower EBITDA margins.

However, RoCE is superior in case of third party distributors versus own sales team.

Chart 5: Sales channel Chart 6: Region‐wise distributors


Note: Above chart is based on FY13 data

Excellent execution, efficient capital allocation

SCC, unlike other global agrochemical players, has refrained from acquisitions or inorganic

growth over the years. The company has built its business in tough regulatory environments

via investments in registrations funded primarily via internal accruals. Since incorporation,

SCC’s sole acquisition has been a 76% stake in Axis Crop Science with minimal investment,

which focuses on marketing and distribution of formulation products in India. During FY15,

the company raised its stake to 100% in Axis Crop Science.

Over the years, most of the company’s capex has been for getting registrations, which have

been funded primarily through internal accruals. However, SCC has received USD24mn in

2008 from a private equity partner which was also utilized for product registrations. It

continues to focus on utilising future cash flows to get product registrations. Simultaneously,

SCC continues to evaluate the possibility of partnerships with other companies across

different geographies which will provide it with an opportunity to enhance its portfolio of

registrations and grow in those markets. It also continues to evaluate additional markets

and product opportunities, including potential acquisitions and relationships, which we

believe will be crucial for it to enhance its presence in generic agrochemical markets.

Third party90%

Own team10%

Europe35%

LATAM32%

NAFTA12%

RoW21%

Overhead cost is higher in the

case of third party distributors.

However, inventory requirement

is lower versus own distribution.

It resulted to lower EBITDA

margin in third party distributors.

However, RoCE will be superior

versus own sales team.

SCC has built its business in

tough regulatory environments

via investments in registrations

funded primarily via internal

accruals

Miscellaneous


Chart 7: RoE/RoCE improved despite large investments


Note: Financials till FY14 are taken from red herring prospectus and these are restated numbers

Chart 8: Excellent utilisation of capital—Break up of overall cash outflow



1.0

1.8

2.6

3.4

4.2

5.0

8.0

14.4

20.8

27.2

33.6

40.0

FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E

(x)

(%)

Asset turnover ratio (x) RoE (ex cash and liquid investments)

RoCE (ex cash and liquid investments)

(500)

0

500

1,000

1,500

2,000

FY09 FY10 FY11 FY12 FY13 FY14 FY15

(INR mn)

Investment in registrations Investments plus cash in hand Dividend (incl div tax)

Sharda Cropchem


Eyeing larger global pie

SCC currently has a paltry 0.28% share in the USD60bn (in CY14) global agrochemical market.

It is tightening its girdle for a larger global pie via aggressively registering products across

geographies—the number of registrations catapulted at 47.2% over FY10‐15. We estimate

its market share to shoot up to 0.37% assuming global agrochemical market CAGR of 3%

over FY15‐17 and riding SCC’s multiple growth levers.

Chart 9: Large generic agrochemical players—SCC set to capture larger global pie

Source: Industry, Edelweiss research

Note: Above chart is based on CY13 data

0

600

1,200

1,800

2,400

3,000

Adam

a

Nufarm UPL

Arysta

Cheminova

Sipcam

Sharda

(USD

mn)

We have reached a milestone in

which we have established the

minimum operational scale to

make us an agile, young and

growing member of the global

crop protection industry

Mr. R. V. Bubna Chairman & Managing Director

Miscellaneous


Valuation

SCC pursues a differentiated business model versus Rallis India, Bayer, Dhanuka, PI

Industries and UPL in terms of geography mix as well as focus on registrations. The company

is at an inflection point wherein multiple factors—rising wallet share in existing products,

new launches and supported by expanding in‐house sales team—will trigger growth in the

mid to long term. We believe the best is yet to come given SCC’s potent registration

capability and rising participation in the burgeoning crop protection agrochemicals industry.

We estimate SCC to post sales and PAT CAGR of 19.2% and 18.8% (FY10‐15 CAGR of 24.7%

and 37.4%), respectively, over FY15‐17, utilising the multiple growth levers at its disposal.

The company has robust operating cash flow (expected to generate INR1.5bn over FY15‐

17E), a net cash balance sheet and healthy ex cash‐RoE/RoCE (>25%).

Despite a superior growth profile, balance sheet and RoE/RoCE, the stock is trading at a

discount to peers. Hence, we perceive re‐rating potential in light of its strong product

registration led growth, net cash balance sheet and return ratios. We value it at P/E of 18x

FY17E with target price of INR400. We are valuing Bayer/PI/Rallis/UPL at 24x/22x/18x/15x

FY17E EPS, respectively. We initiate coverage with ‘BUY’.

Table 2: Peer comparison


Companies CMP Mcap DPS D‐Yield

(INR) (INR bn) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 %

Sharda Cropchem 294 27 15.7 17.0 22.2 52.5 8.2 30.4 18.7 17.3 13.3 23.4 21.3 23.2 2.5 0.9

Dhanuka Agritech 467 23 21.2 21.6 29.9 13.9 2.2 38.3 22.0 21.6 15.6 33.0 30.9 35.9 4.5 1.0

Bayer Cropscience 3,864 142 104.8 134.4 166.2 28.3 28.3 23.6 36.9 28.7 23.3 20.3 22.0 22.6 17.0 0.4

Rall is India 205 40 8.3 9.3 11.9 (0.9) 11.8 28.1 24.7 22.1 17.2 21.1 21.1 23.6 2.5 1.2

PI Industries 712 96 17.1 21.2 30.0 23.5 24.4 41.3 41.7 33.5 23.7 29.3 28.5 31.3 2.5 0.4

United Phosphorus 531 228 26.9 31.5 39.4 9.6 17.2 25.1 19.8 16.9 13.5 20.7 21.4 22.5 5.0 0.9

EPS (INR) EPS Growth (%) P/E ROE (%)

We believe the best is yet to come given SCC’s potent registration capability and

rising participation in the burgeoning crop protection agrochemicals industry.

Despite a superior growth profile, balance sheet and RoE/RoCE, the stock is

trading at a discount to peers. Hence, we perceive re‐rating potential in light of its

strong product registration‐led growth, net cash balance sheet and return ratios.

We value SCC at P/E of 18x FY17E EPS. We are valuing Bayer/PI/Rallis/UPL at

24x/22x/18x/15x FY17E EPS, respectively.

Sharda Cropchem


Key Risks

Weather: The crop protection industry has to contend with the vagaries of nature.

Inclement weather can trigger pest infestations as well as affect demand for crop‐protection

products. Adverse weather conditions in SCC’s regions will negatively affect the company’s

sales. Further, delayed or adverse monsoon could negatively affect collection of receivables.

However, we believe SCC has presence in over 76 countries which minimises country

specific risk and its impact on overall financials.

Genetically modified (GM) crops: The use of crop protection products is significantly less for

GM crops. Hence, growth and acceptance of GM crops by consumers may adversely affect

SCC’s business.

Adverse currency movement: SCC deals in multiple currencies across geographies. Ergo, any

sharp movement could impact the company’s earnings adversely. Further, its relatively long

receivables cycle enhances the currency volatility risk. However, we believe it can pass on

the impact to customers to some extent with a lag. Moreover, SCC’s sales and purchases are

in EUR/ USD and USD, respectively. Hence, it provides natural hedge to significant extent.

However, we see major currency risk in term of EUR‐USD movement.

Regulatory risk: SCC operates in a highly regulated sector; if it fails to comply with

regulations prescribed by authorities, the company’s financials could be adversely affected.

Any negative regulatory changes could adversely impact the industry as well as SCC.

Dependence on Chinese suppliers: SCC is predominantly dependent on Chinese vendors for

its sourcing. Issues like adverse movement in Chinese currency, rising labour costs and

heightened costs of environmental compliance could significantly impact the

competitiveness of Chinese manufacturers. This, in turn, could affect SCC’s sourcing

capabilities. However, the company claims that it has long standing relationships with

suppliers and such challenges will not impact it materially. Further, SCC has 2‐3 suppliers for

individual products which reduce the dependency on single product.

Miscellaneous


Company Description

SCC is a crop protection chemical company marketing and distributing a wide range of

formulations and active ingredients globally. It also procures and supplies belts, general

chemicals, dyes and dye intermediates. Agrochemical and non‐agrochemical businesses

contributed 82% and 18% to FY15 sales, respectively.

Chart 10: Revenue break up (FY15)


The company commenced operations via 2 sole proprietary firms, each set up by Mr.

Ramprakash V. Bubna and Ms. Sharda R. Bubna. After incorporation as Sharda Worldwide

Exports in 2004, the generic agrochemical and non‐agrochemical businesses conducted by

both the firms were transferred to the company. The company’s name was changed to

Sharda Cropchem and it was converted into a public limited company in FY14.

Agrochemicals82%

Non‐agrochemicals

18%

SCC is a crop protection chemical company marketing and distributing a wide

range of formulations and active ingredients globally.

The company came out with an IPO in September 2014 at INR145‐156/share and

received overwhelming response—subscribed ~60x.

It has 1,488 registrations across geographies as on June 30, 2015.

Management team has rich experience in agriculture and agrochemical industry.

Sharda Cropchem


Fig. 5: SCC—The journey

Source: Company

Initially, the company was predominantly involved in trading of agrochemical products.

However, it started acquiring registrations aggressively aided by investments from

Henderson Equity Partners (HEP) in 2008. HEP subscribed to 1.7mn equity shares (10% of

shareholding) for INR600mn in March 2008 and 1.1mn equity shares (6% of shareholding)

for INR400mn in May 2008. SCC came out with an IPO in September 2014 with Henderson

Equity Partners selling its entire 15.87% stake and with promoters offering 9.13% stake to

comply with SEBI norm of promoter holding below 75%; there was no fresh issuance of

shares. IPO came at INR145‐156/share and received overwhelming response—subscribed

~60x.

Over the years, SCC has primarily grown organically and its core strength lies in identifying

generic molecules, preparing dossiers, seeking registrations, marketing & distributing

formulations or generic active ingredients in fungicide, herbicide & insecticide segments.

The company has recently entered the biocide segment and has acquired several

registrations from existing registration holders, primarily, in Europe. As on June 30, 2015,

the company owns 1,284 and 204 registrations for formulations and generic active

ingredients, respectively, across Europe, NAFTA, Latin America and RoW. It has 1,488

registrations across geographies as on June 30, 2015.

Incorporated as a privatelimited company

Acquired the businesses of the sole proprietary concerns, M/s. Sharda International and M/s. Bubna Enterprises

Commenced obtaining registrations in the

United States

HEP subscribed to 2,864,099Equity Shares for an aggregate considerationof INR1bn

Acquired 76%shareholding in

Axis Crop Science

Sharda InternationalFZE (subsidiary) was mergedwith the Company

Name changed from ShardaWorldwide Exports

to Sharda Cropchem Pvt Ltdand thereafter to

Sharda Cropchem Ltd, upon conversion to a public

company

Acquired remaining24% shareholding inAxis Crop Science

2004

2006

2008

2011

2012

2013

2014

Miscellaneous


Chart 11: Well diversified—Number of registrations in terms of geographies


Note: Data as on June 30, 2015

Chart 12: Well diversified—Number of registrations in terms of value chain


Note: Data as on June 30, 2015

SCC’s revenue is well diversified in terms of geographies. Europe, NAFTA, Latin America and

RoW contributed 47%, 20%, 18% and 15%, respectively, to FY15 revenue.

683

77

395

333

Europe NAFTA LATAM RoW

46%

5%

27%

22%

Active Ingredients

14%

Formulations86%

Sharda Cropchem


Chart 13: Geography‐wise sales


SCC’s management team has rich experience in the agriculture and agrochemical industry.

Table 3: Management profile


Europe47%

NAFTA20%

Latin America18%

RoW15%

Key personnel Profile

Mr.Ramprakash V. Bubna, Chairman

and Managing Director

Holds a bachelor’s degree of Technology in Chemical Engineering from Indian Institute of

Technology, Bombay. He has 45 years of experience in the chemicals, agrochemicals and

related businesses. He is responsible for the company’s overall business operations and

strategy. Earlier, he has been associated with Tata Oil Mills, Zenith, Piramal Rasayan,

Coromandel International and Zuari Agrochemicals.

Mr.Ashish R. Bubna, Executive

Director

Has 22 years of experience in the marketing of chemicals, agrochemicals and related

businesses. He has been instrumental in strategising early investment in product

registrations and building l ibrary of dossiers. He is responsible for marketing,

procurement, registrations and logistics function of agrochemical business.

Mr.Manish R. Bubna, Executive

Director

He has 20 years of experience in the chemicals, agrochemicals and related businesses.

He has spearheaded SCC’s foray into the conveyor belt and general chemicals business.

He also oversees the information technology, logistics and documentation functions.

Miscellaneous


Industry Overview

Global market

The global agrochemical (excluding non crop) industry posted CY01‐14 CAGR of 7% and is

worth USD60bn. In 2007, crop prices began to rise and spiked substantially in 2008,

catapulting the agriculture economy. However, in 2009, crop prices tumbled triggered by

the severe down turn in the global economy following the banking crisis in Europe and US.

This, coupled with a major reduction in glyphosate prices (largest selling herbicide) following

increased supply from Chinese companies, resulted in the overall value of the global crop

protection market declining. The global agrochemical industry is likely to post ~3% CAGR

over CY14‐18 driven by primarily Asia, Middle East and Africa.

Chart 14: Global agrochemicals industry


Agrochemicals are necessary to avoid losses due to weeds, fungal disease and insect

infestations to crops. According to Cheminova (global generic crop protection player), 30‐

50% of crops are saved by use of agrochemicals globally. The global agrochemical industry is

well diversified in terms of geographies as well as product segments.

(9.0)

(2.2)

4.6

11.4

18.2

25.0

20.0

29.6

39.2

48.8

58.4

68.0

CY01

CY02

CY03

CY04

CY05

CY06

CY07

CY08

CY09

CY10

CY11

CY12

CY13

CY14

(%)

(USD

bn)

Industry Size (USD bn) YoY gr (%) (RHS)

The global agrochemical (excluding non‐crop) industry posted CY01‐14 CAGR of

7% and is worth USD60bn.

It is estimated to post ~3% CAGR over CY14‐18 driven by primarily Asia, Middle

East and Africa.

Crop protection industry players are categorised into innovators and generics.

Patented products contribute only ~25% to the global crop protection market,

balance market is off‐patented (generics). However, 45% of the generic market is

still controlled by innovator companies. Hence, we believe it will be an attractive

opportunity for generic players in the future.

Sharda Cropchem


Chart 15: Geography‐wise global agrochemicals market


Chart 16: Break‐up of global agrochemical market in terms of product segments


Crop protection industry players are categorised into innovators and generics. Innovators

are research & development patented product‐based players like Bayer, Syngenta, BASF,

Monsanto, Dow and Dupont. Off‐patented products‐based players are termed generic

players. Their key strength is low‐cost manufacturing and a wide distribution network. As

per a Philips McDougall Report (2007), while patented products contribute only ~25% to the

global crop protection market, balance market is off‐patented (generics). However, 45% of

the generic market is still controlled by innovator companies. Hence, we believe it will be an

attractive opportunity for generic players in the future.

Latin America26%

Europe25%

NAFTA18%

Asia27%

Middle East/Africa

4%

2013

Herbicide44%

Insecticide 27%

Fungicide26%

Others3%

2013

Herbicide43%

Insecticide 27%

Fungicide27%

Others3%

2018

Latin America26%

Europe25%NAFTA

17%

Asia28%

Middle East/Africa

4%

2018

Miscellaneous


Chart 17: Global patented and off‐patented market Chart 18: Share of innovators in off‐patented market

Source: Philips McDougall, Edelweiss research

One of the defining characteristics of the crop protection industry over the previous few

decades has been the degree of consolidation. This can be attributed to several factors, one

of the most important of which has been an apparent lack of growth opportunities.

Chart 19: Moderating growth triggered industry consolidation


Patented25%

Off patented75%

0.0

3.0

6.0

9.0

12.0

15.0

1960‐69 1970‐79 1980‐89 1990‐99 2000‐09 2010‐12

(%)

Generic Players55%

Innovators45%

Sharda Cropchem


Table 4: Global agrochemical industry structure


Domestic market

According to the industry, the domestic agrochemicals sector posted 14‐year CAGR (FY01‐

15) of 7‐8% and is worth INR130bn currently. It is expected to post 10‐12% CAGR in the near

term riding increasing food consumption, rising MSP, sharpened government focus and

mounting cost of labour. In India, consumption of agrochemicals is well below the global

standard.

Chart 20: Consumption pattern of agrochemicals


Further, 18‐20% of crops are saved due to use of agrochemical products in India. Major

agrochemicals consuming states are from southern and western belts. Paddy (rice) followed

by cotton are major agrochemicals consuming crops.

Market Share

Region >15% 15%‐5% 5%‐1% 1%‐0.5% <0.5%

Europe Bayer, Syngenta BASF Cheminova Sipcam Oxon Isagro, Helm,Phyteurop

USA Dow,

Monsanto,

DuPont

FMC Gowan,

Albaugh

Japan Sumitomo chemical,

Arysta

Ishihara, Nihon

Nohyaku, Nippon

Soda, Nissan,

Mitusi Kumiai

Hokko, Agro Kanesho, SDS

Biotech, Otsuka, Nippon

Kayaku, Kyoyu Agri

Others UPL,

Nufarm,

Adama

Sinochem Rotam, Rallis, Sinon, Excel,

Wynka Red, Sun, Gharda

Agro‐ chemicals Industry Structure – 2013*

0

4

8

13

17

21

Taiwan China Japan US Korea France UK Pakistan India

(Per kg/Hectare)

Miscellaneous


Financial Outlook

Healthy growth momentum coupled with stable EBITDA margin

SCC has posted robust sales CAGR of 24.7% over FY10‐15 primarily driven by volumes on

account of new product launches and addition of new geographies. During FY15, adverse

currency movement in Europe took a toll on the company’s revenue, as it is the largest

contributing geography. Despite this, SCC reported strong revenue growth of 34.2% YoY in

FY15. The company has guided for volume growth of 15‐20% in FY16 considering challenging

market conditions in the global agrochemical market, especially Europe. Management has

guided for 20‐25% revenue CAGR over next 3‐5 years. Of this, 10% growth will be driven by

existing products and new products will drive incremental 10‐15% growth.

We have assumed revenue growth of 14.6% YoY in FY16 on account of single digit growth in

Europe led by adverse currency movement. However, we have considered constant

currency growth of 16% YoY in FY16. We estimate the company to post 19.2% sales CAGR

over FY15‐17 on account of:

rising wallet share in existing products.

new product launches.

Further supported by expanding in‐house sales team.

Management has guided for 20‐25% revenue CAGR over next 3‐5 years. 10%

growth will be driven by existing products and new products will drive

incremental 10‐15% growth.

SCC reported sustainable EBITDA margin of 18‐20% over FY10‐15. We have

considered 18‐19% EBITDA margin over FY15‐17 in our estimate.

The company follows a policy of a amortizing its product registration charges on a

straight line basis over five years versus UPL’s 15 years.

SCC has superior asset turnover ratios which led to strong return ratios versus

peers.

SCC has healthy RoE/RoCE (>25%) and we believe its cash flow will improve

significantly going forward.

Management has guided for 20‐

25% revenue CAGR over next 3‐5

years. Out of this, 10% of growth

will be driven by existing

products and increment growth

of 10‐15% will be driven by

introduction of new products.

Sharda Cropchem


Chart 21: Robust revenue surge to sustain



We believe the highly regulated markets of Europe and US are superior margin geographies

as competition is limited. Gross margins in Europe and US are 50‐60% and 40‐50%,

respectively, versus 25‐35% in other geographies. On account of higher contribution from

Europe and NAFTA, SCC enjoys at par/premium margin versus peers despite having no

manufacturing.

Table 5: Strong EBIT margin


SCC reported sustainable EBITDA margin of 18‐20% over FY10‐15. We have considered 18‐

19% EBITDA margin over FY15‐17 in our estimate. We estimate, EBITDA and PAT to grow at

CAGR of 23.0% and 18.8%, respectively, over FY15‐17 primarily driven by strong revenue

stream led by multiple levers. The company has superior asset turnover ratios which led to

strong return ratios versus peers.

Table 6: Superior asset turnover ratio


Note: We have considered fixed assets plus net working capital to calculate asset turnover ratio

0.0

9.0

18.0

27.0

36.0

45.0

0

3,500

7,000

10,500

14,000

17,500

FY11 FY12 FY13 FY14 FY15 FY16E FY17E

(%)

(INR mn)

Europe NAFTA Latin America RoW % Gr (RHS)

Particulars FY11 FY12 FY13 FY14 FY15 FY16E FY17E

Sharda Cropchem 9.8 13.0 13.3 15.9 15.7 15.6 16.5

Bayer Cropscience 8.9 9.6 11.3 11.2 13.1 14.4 15.1

PI Industries 14.1 14.9 13.8 16.1 16.6 17.3 18.9

Rall is India 16.0 14.4 12.6 13.3 12.7 12.9 13.7

Dhanuka Agritech 14.5 14.2 13.3 15.7 16.6 15.8 17.2

UPL 14.9 14.0 14.2 15.0 16.0 16.7 17.3

Particulars FY11 FY12 FY13 FY14 FY15 FY16E FY17E

Sharda Cropchem 1.8 2.4 2.7 2.7 3.1 2.7 2.7


PI Industries 1.9 1.8 1.8 2.1 2.3 2.4 2.6

Rall is India 3.6 2.3 2.1 2.3 2.1 2.1 2.3


UPL 1.6 1.4 1.4 1.5 1.6 1.7 1.8

On account of higher

contribution of Europe and

NAFTA, SCC enjoys at

par/premium margin versus

peers despite having no

manufacturing

SCC has superior asset turnover

ratios

Miscellaneous


Table 7: Robust RoCE


SCC follows a policy of a amortizing its product registration charges on a straight line basis

over five years. Product registration charges generally include costs incurred towards

creating product dossiers, fees paid to registration consultants, application fees to the

ministries, data compensation charges etc. Its peer UPL however follows a policy of

amortizing expenditure incurred on product acquisitions over a period of 15 years on a

straight line basis.

Chart 22: Stable margins Chart 23: Robust PAT growth trajectory



Strong balance sheet coupled with healthy return ratios

SCC has a strong balance sheet with minimal gross debt. The company has only short‐term

borrowings of INR0.4bn as on March 31, 2015, which are primarily working capital loans.

However, its current investment and cash balance stand at INR1.6bn.

Particulars (Pre‐tax %) FY11 FY12 FY13 FY14 FY15 FY16E FY17E

Sharda Cropchem 16.0 23.5 24.2 25.0 30.3 29.0 32.3


PI Industries 27.0 26.5 25.3 34.9 37.9 39.7 44.0

Rall is India 35.7 28.7 26.6 30.5 26.9 27.8 31.4


UPL 16.8 16.6 16.7 19.5 21.6 24.2 26.5

14.0

16.0

18.0

20.0

22.0

24.0

500

1,100

1,700

2,300

2,900

3,500

FY11

FY12

FY13

FY14

FY15

FY16E

FY17E

(%)

(INR mn)

EBITDA EBITDA % (RHS)

5.0

22.0

39.0

56.0

73.0

90.0

300

700

1,100

1,500

1,900

2,300

FY11

FY12

FY13

FY14

FY15

FY16E

FY17E

(%)

(INR mn)

PAT Growth % (RHS)

SCC follows a policy of a

amortizing its product

registration charges on a straight

line basis over five years versus

UPL’s 15 years

Sharda Cropchem


Chart 24: Net cash balance sheet



The company has healthy RoE/RoCE (>25%) and we believe its cash flow will improve

significantly going forward. On account of rising cash level, SCC has started paying dividend

from FY13—payout stood at 16% in FY15.

Chart 25: Healthy return ratios Chart 26: Cash‐flows set to improve



0

500

1,000

1,500

2,000

2,500


(INR mn)

Gross debt Cash & Cash equivalents

10.0

16.0

22.0

28.0

34.0

40.0


(%)

Pre‐tax RoE (%) Pre‐tax RoCE (%)

(200)

240

680

1,120

1,560

2,000


(INR mn)

Operating cashflow Free cashflow

Miscellaneous


Financial Statements

Key assumptions


Macro GDP(Y‐o‐Y %) 6.9 7.4 8.0 8.7

Inflation (Avg) 9.5 5.9 5.0 5.0

Repo rate (exit rate) 8.0 7.5 6.8 6.5

USD/INR (Avg) 60.5 61.2 64.5 65.0

Company Sales growth YoY (%)

Europe 33.7 35.2 5.0 24.0

NAFTA (15.2) 67.3 23.0 24.0

Latin America (28.6) 18.1 23.0 24.0

RoW 8.0 19.4 23.0 24.0

Cost Assumptions

Raw Material Cost as % Net Rev. 65.0 66.9 67.0 66.8

Employee expenses as % Net Rev. 2.3 2.3 2.3 2.2

Other Expenses as % Net Revenue 13.2 12.9 12.5 12.0

Financial Assumptions

Deprec. rate as % of avg. gross block 12.2 8.6 9.5 9.3

Int. rate as % of avg. gross debt 3.2 2.0 5.3 NA

Tax rate as % of PBT 32.3 27.0 28.0 28.0

Capex (INR mn) (855) (801) (762) (750)

Net borrowings (INR mn) (1,509) (1,180) (1,528) (1,996)

Receivable (days) 185 156 165 165

Inventory (days) 57 72 72 72

Payable (days) 219 171 179 178

Cash conversion cycle (dayes) 23 57 58 59

Income statement (INR mn)


Net revenues 7,904 10,611 12,159 15,077

Raw material costs 5,140 7,101 8,146 10,071

Gross profit 2,763 3,510 4,012 5,006

Employee expenses 181 246 280 332

Other expenses 1,039 1,369 1,520 1,809

Operating expenses 1,221 1,615 1,800 2,141

Total expenditure 6,361 8,716 9,946 12,212

EBITDA 1,543 1,895 2,213 2,865

Depreciation & amortisation 289 233 313 377

EBIT 1,253 1,662 1,899 2,487

Less: Interest Expense 14 8 10 10

Add: Other income 132 287 240 300

Profit Before Tax 1,372 1,941 2,129 2,777

Less: Provision for Tax 443 524 596 778

Add: Exceptional items (net of tax) 182 (187) 74 ‐

Reported Profit 1,111 1,230 1,607 2,000

Less: Exceptional Items (Net of Tax) 182 (187) 74 ‐

Adjusted Profit 929 1,416 1,533 2,000

No. of Shares outstanding (mn) 90.2 90.2 90.2 90.2

Adjusted Basic EPS 10.3 15.7 17.0 22.2

No. of Dil. shares outstanding (mn) 90.2 90.2 90.2 90.2

Adjusted Diluted EPS 10.3 15.7 17.0 22.2

Adjusted Cash EPS 13.9 19.5 20.5 26.3

Dividend per share (DPS) 2.0 2.5 3.0 3.5

Dividend Payout Ratio (%) 19.0 22.1 20.2 18.9

Common size metrics (% net revenues)


Gross margin 35.0 33.1 33.0 33.2

Operating expenses 15.4 15.2 14.8 14.2

EBITDA margins 19.5 17.9 18.2 19.0

EBIT margin 15.9 15.7 15.6 16.5

Interest 0.2 0.1 0.1 0.1

Net profit margin 11.8 13.3 12.6 13.3

Growth metrics (%)


Revenues 1.6 34.2 14.6 24.0

EBITDA 10.2 22.8 16.8 29.5

PBT 25.2 41.4 9.7 30.4

Net profit 22.0 52.5 8.2 30.4

EPS 22.0 52.5 8.2 30.4

Sharda Cropchem


Balance sheet (INR mn)

As on 31st March FY14 FY15 FY16E FY17E

Share capital 902 902 902 902

Reserves & surplus 4,655 5,643 6,925 8,546

Shareholder equity 5,557 6,545 7,827 9,448

Total Borrowings 399 381 ‐ ‐

Long Term Liabilities & Provisions 2 5 5 5

Deferred Tax Liability (net) 102 215 215 215

Sources of funds 6,061 7,147 8,048 9,669

Intangible assets 621 868 1,305 1,678

Tangible assets 19 15 15 15

Capital work in progress 1,335 1,488 1,500 1,500

Total Fixed Assets 1,975 2,371 2,820 3,193

Non current investments 53 90 90 90

Cash and cash equivalents 1,909 1,561 1,528 1,996

Inventories 808 1,396 1,607 1,987

Sundry debtors 4,002 4,544 5,496 6,816

Loans and advances 291 491 491 491

Other Current Assets 104 12 12 12

Total current assets (ex cash) 5,205 6,443 7,606 9,305

Trade payable 2,049 2,281 2,678 3,311

Other Current Liab. & ST Prov. 1,032 1,038 1,318 1,605

Total current liabilities & prov. 3,081 3,319 3,997 4,916

Net Current Assets (ex cash) 2,124 3,124 3,610 4,389

Uses of funds 6,061 7,147 8,048 9,669

Book value per share (INR) 62 73 87 105

Free cash flow (INR mn)


Reported Profit 1,111 1,230 1,607 2,000

Add: Depreciation 289 233 313 377

Interest (Net of Tax) 10 6 8 8

Others 43 (279) ‐ ‐

Less: Changes in WC (120) 723 486 780

Operating cash flow 1,563 461 1,435 1,597

Less: Capex 855 801 762 750

Free cash flow 708 (340) 673 847

Cash flow metrics


Operating cash flow 1,563 461 1,435 1,597

Financing cash flow (191) (212) (706) (379)

Investing cash flow (1,508) 237 (762) (750)

Net cash flow (136) 486 (33) 469

Capex (855) (801) (762) (750)

Dividends paid 105 211 325 379

Profitability ratios


Pre‐tax Return on Capital Employed 25.0 30.3 29.0 32.3

Return on Average Equity (ROAE) (%) 18.2 23.4 21.3 23.2

Current ratio 2.3 2.4 2.3 2.3

Quick ratio 1.4 1.5 1.5 1.5

Cash ratio 0.6 0.5 0.4 0.4

Debtors Days 185 156 165 165

Inventory Days 57 72 72 72

Payable Days 219 171 179 178

Cash Conversion Cycle 23 57 58 59

Operating ratios (x)


Total asset turnover 1.4 1.6 1.6 1.7

Fixed asset turnover 12.3 13.9 11.0 10.0

Equity turnover 1.5 1.8 1.7 1.7

Valuation parameters


Adjusted Diluted EPS (INR) 10.3 15.7 17.0 22.2

Y‐o‐Y growth (%) 22.0 52.5 8.2 30.4

Adjusted Cash EPS (INR) 13.9 19.5 20.5 26.3

Diluted Price to Earnings Ratio (P/E) ( 28.6 18.7 17.3 13.3

Price to Book Ratio (P/B) (x) 4.8 4.1 3.4 2.8

Enterprise Value / Sales (x) 3.2 2.4 2.1 1.6

Enterprise Value / EBITDA (x) 16.2 13.4 11.3 8.6

Dividend Yield (%) 0.7 0.9 1.0 1.2

Miscellaneous


Holding Top ‐10

Perc. Holding Perc. Holding

DSP Blackrock 4.06 L&T Investment Management 1.51

HDFC Asset Management Co Ltd 2.66 UTI Asset Management 0.86

SBI Funds Management 1.95 Reliance Capital Trustee 0.62

Goldman Sachs 1.92 USAA Investment Management 0.52

Pinebridge Investments‐Asia 1.53 Morgan Stanley Investment Management 0.44

*as per last available data

Insider Trades Reporting Data Acquired / Seller B/S Qty Traded

No data available


Bulk Deals Data Acquired / Seller B/S Qty Traded Price

23 Sep 2014 MILLENNIUM STOCK BROKING PVT LTD Sell 1019582 239.18

23 Sep 2014 MILLENNIUM STOCK BROKING PVT LTD Buy 1019582 238.74

23 Sep 2014 MARWADI SHARES AND FINANCE LIMITED Sell 928657 247.88

23 Sep 2014 MARWADI SHARES AND FINANCE LIMITED Buy 928657 245.82


Additional Data

Directors Data Ramprakash V. Bubna Chairman and MD Sharda R. Bubna Executive Director

Ashish R. Bubna Executive Director Manish R. Bubna Executive Director

M.S. Sundara Rajan Independent and Non‐Executive Director Urvashi Saxena Independent and Non‐Executive Director

Shitin Desai Independent and Non‐Executive Director P.R. Srinivasan Independent and Non‐Executive Director

Shobhan Thakore Independent and Non‐Executive Director

Auditors ‐ S.R. Batliboi & Co.


Sharda Cropchem


`

200

250

300

350

400

450

Sep‐14

Oct‐14

Nov‐14

Nov‐14

Dec‐14

Jan‐15

Jan‐15

Feb‐15

Mar‐15

Mar‐15

Apr‐15

May‐15

Jun‐15

Jun‐15

Jul‐15

Aug‐15

Aug‐15

(INR)

Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098.

Board: (91‐22) 4009 4400, Email: [email protected]

Nirav Sheth

Head Research

[email protected]

Coverage group(s) of stocks by primary analyst(s): Miscellaneous

Agro Tech Foods, Bayer Cropscience, CCL Products India, Dhanuka Agritech, Jain Irrigation, PI Industries, Rallis India, Supreme Industries, Solar Industries,

UPL.

Distribution of Ratings / Market Cap

Edelweiss Research Coverage Universe

Rating Distribution* 155 45 8 208* stocks under review

Market Cap (INR) 151 54 3

> 50bn Between 10bn and 50 bn < 10bn

Date Company Title Price (INR) Recos

Buy Hold Reduce Total

Recent Research

01‐Sep‐15 Agro Tech Foods

Structural play; Visit Note

601 Buy

28‐Aug‐15 PI Industries Innovation, expansion to drive growth; Visit Note

700 Hold

13‐Aug‐15 Dhanuka Agritech

Growth pangs; Result Update

547 Buy

Rating Interpretation

Buy appreciate more than 15% over a 12‐month period

Hold appreciate up to 15% over a 12‐month period

Reduce depreciate more than 5% over a 12‐month period

Rating Expected to

One year price chart

Miscellaneous


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Sharda Cropchem


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