Small Cap Chemical Stock To Buy For 27% Gains, Board Recommends Dividend: Prabhudas Lilladher

Broking firm Prabhudas Lilladher has come up with a buy on Small cap Chemicals stock Sharda Cropchem Ltd. for high gains. The brokerage assigns a target price of Rs 640/share to the stock, sees potential gains of up to 27%. The Board of Directors of Sharda Cropchem in their meeting held on 12 May 2023 recommended a final dividend of Rs 1.30 per equity share for the financial year 2022-23.

Recommends Dividend

"The Board of Directors considered and recommended Final Dividend at the rate of Rs. 3.00 per equity share of face value of Rs. 10.00 each for financial year 2022-23, subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company," the company said in an exchange filing.

Positive end to the year..!! Buy for a target price of Rs. 640/share

Prabhudas Lilladher said, "We trim our FY24/25E estimates by 5% each, citing high channel inventory concerns in key geographies particularly the NAFTA region (contributing ~34% of the agrochemical revenues in FY23). Sharda Cropchem (SHCR) reported revenue growth of 3% YoY, led by volume/price/FX growth of - 3%/+2%/+4% YoY. Gross margins (GM) expanded by 240bps YoY to 31.6%, largely led by better product and geographical mix (higher contribution of Europe- higher margin zone) aided by positive currency impact which was offset by higher opex up 330bps YoY resulting into an EBITDA margin contraction of 20bps YoY (incl. IU&AD write-off of Rs54mn in 4QFY23) to 20.7%."

It added, "Citing positive growth momentum across regions (barring NAFTA) coupled with price hikes in the recent past, management remains confident of achieving ~15% YoY revenue growth with margins to be in the range of 18-20% in FY24E. That said, we maintain our 'BUY' rating on the stock with revised TP of Rs640 (earlier Rs670) based on 14XFY25 EPS."

Stock Outlook - Current Market Price, 52-Week Low/High, & Returns

On Monday, the share of Sharda Cropchem closed 1.85% higher at Rs. 506.35/share. The stock traded the 52 week high on 24 May 2022 at Rs. 769.15/share and 52 week low on 1 November 2022 at Rs. 368.55/sare, respectively. It has a market capitalisation of Rs. 4,568.31 crore.

It jumped 7.27% in the past 1 week, and 9.58% in the past 1 month, respectively. The stock has fallen 21.58% in the past 1 year. It has given 256.84% in the past 3 years. In the past 5 years, it has given 15.09% positive return.

About - Sharda Cropchem

Sharda Cropchem Ltd (Formally Known as Sharda Worldwide Exports Pvt Ltd.) is a chemicals sector company principally engaged in the export of agrochemicals (technical grade and formulations) and non-agro products such as conveyor belts, rubber belts/sheets, dyes and dye intermediates to various countries across the world.

Disclaimer - The stock has been picked from the brokerage report of Prabhudas Lilladher. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.