Sharda Cropchem , a leading agrochemical company, has set its sights on achieving EBITDA margins exceeding 18% in FY26, buoyed by a combination of favorable market trends and operational improvements. The company's optimistic outlook comes as a relief after two years of challenges in the agrochemical sector.

Factors Driving Growth

Chairman and Managing Director Ramprakash V Bubna highlighted several key factors contributing to the company's positive forecast:

1. Improving Pricing Trends: After facing pricing pressures in recent years, the market is showing signs of stabilization.
2. Stable Euro-Dollar Exchange Rates: As 95% of Sharda Cropchem's sourcing is from China in dollars, while the majority of sales are in Europe, stable exchange rates are crucial for the company's performance.
3. Operational Efficiencies: The company is focusing on streamlining its operations to enhance profitability.
4. Normalization of Global Inventory Levels: The destocking pressures that affected the industry over the past two years have eased, with inventory levels returning to normal.

Strong Q1 Performance and Future Outlook

Sharda Cropchem reported robust growth in the first quarter of the current fiscal year. Bubna expressed confidence that this positive momentum is expected to continue, supporting the company's ambitious EBITDA margin target for FY26.

Cash Position and Dividend Policy

The company maintains a strong financial position with approximately Rs 790.00 crore in cash and cash equivalents. While there are no immediate acquisition plans, Sharda Cropchem has demonstrated its commitment to shareholder returns:

• Doubled dividends in FY25
• Considering further increases in dividend payouts

Impact of U.S. Tariffs

Despite concerns about potential impacts from U.S. tariffs, Sharda Cropchem remains unperturbed. Bubna explained that due to strict U.S. government approval requirements for their products, the company can pass on any tariff increases to customers without significantly affecting their business.

Conclusion

Sharda Cropchem's optimistic outlook for FY26, driven by improving market conditions and operational efficiencies, signals a potential turnaround after recent challenges in the agrochemical sector. The company's strong cash position and favorable dividend policy further underscore its financial health and commitment to shareholder value.

Sharda Cropchem Limited , a leading player in the generic crop protection chemicals industry, has reported robust financial results for the first quarter of the fiscal year, ending June 30. The company has also announced ambitious growth targets for the full fiscal year.

Q1 Financial Highlights

Sharda Cropchem witnessed significant growth across key financial metrics in Q1:

• Revenue from operations surged by 25% year-on-year to Rs. 984.80 crore, compared to Rs. 785.10 crore in the same quarter last year.
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) saw a remarkable 67% increase, reaching Rs. 142.20 crore, up from Rs. 85.40 crore in the same quarter last year.
• Net profit after tax showed an impressive growth of 424%, climbing to Rs. 142.80 crore from Rs. 27.30 crore in the corresponding quarter of the previous year.
• The company's EBITDA margin improved to 14.4%, up from 10.9% in the corresponding quarter of the previous year.

Segment-wise Performance

The company's growth was driven by strong performances in both its business segments:

1. Agrochemicals:

   • Revenue increased by 25% to Rs. 846.00 crore
   • Contributed 86% to the total revenue

2. Non-Agrochemicals:

   • Revenue grew by 31% to Rs. 139.00 crore
   • Accounted for 14% of the total revenue

Volume Growth and Margin Improvement

Sharda Cropchem's Managing Director, Mr. Ramprakash V. Bubna, highlighted the company's volume-driven growth, complemented by a gradual recovery in prices. He stated, "We recorded strong volume growth of ~13%, with revenues rising ~25% YoY to Rs. 985 crores. This performance was driven by a global demand revival and improved pricing."

The company also saw a significant improvement in its gross profit margin, which expanded by 630 basis points to 35.5%. Mr. Bubna expressed confidence that these margin levels are expected to be maintained throughout the fiscal year.

Regional Performance

Europe remained a key contributor to Sharda Cropchem's performance in both volume and value terms. The company saw growth across various regions:

• Europe: 43% growth in the Agrochemicals segment
• NAFTA: 3% growth in Agrochemicals
• LATAM: 18% growth in Agrochemicals

Future Outlook and Growth Targets

Looking ahead, Sharda Cropchem has set ambitious targets for the fiscal year:

1. Revenue Growth: The company aims to achieve a 15% growth in topline.
2. EBITDA Margins: Management expects to maintain healthy EBITDA margins in the range of 15-18%.
3. Product Registrations: As of June 30, the company had 2,981 product registrations, with 1,021 applications pending at various stages. This strong pipeline of registrations is expected to drive future growth.
4. Capex Plans: The company plans a capital expenditure of approximately Rs. 400-450 crore, focusing on increasing product registrations.

Mr. Bubna emphasized the company's commitment to growth, stating, "Our strong pipeline of registrations reflects both our resilience and unwavering commitment to growth, laying a strong foundation for sustained future progress."

Financial Position

As of June 30, Sharda Cropchem maintained a strong balance sheet:

• Total equity stood at Rs. 2,649.00 crore
• The company remained debt-free
• Cash, bank, and liquid investments amounted to Rs. 791.00 crore

In conclusion, Sharda Cropchem's robust Q1 performance, coupled with its strategic focus on expanding product registrations and maintaining healthy margins, positions the company for continued growth in the agrochemical sector. The management's optimistic outlook and clear growth targets reflect confidence in the company's business model and market opportunities.