These two agri stocks have zoomed up to 91% in 4 weeks on robust earnings

Sharda Cropchem rallied 8.3 per cent, while Deepak Fertilisers was locked in the 5 per cent upper circuit as the two hit their respective all-time highs on the BSE in Friday's intra-day trade.

Shares of Sharda Cropchem and Deepak Fertilisers and Petrochemicals Corp continued their upward movement, zooming up to 91 per cent in the past four weeks after the two companies reported robust results for the quarter ended December 2021 (Q3FY22). In comparison, the S&P BSE Sensex was down 1.7 per cent during the same period.

In Friday’s intra-day trade, Sharda Cropchem rallied 8.3 per cent at Rs 668.65; while Deepak Fertilisers was locked in the 5 per cent upper circuit at Rs 653.95 as the two hit their respective all-time highs on the BSE. 

In the past four weeks, the market price of Sharda Cropchem has zoomed 91 per cent from level of Rs 350.55 on January 7, 2022. The company's Q3FY22 net profit more-than-doubled to Rs 102 crore. The agrochemicals company had posted profit after tax of Rs 48.3 crore in a year ago quarter.

In Q3FY22, the company's revenue grew by 78.2 per cent year-on-year (YoY) to Rs 879.8 crore led by strong volume growth across geographies & better product mix & price realisation. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded by 220 bps YoY to 22.8 per cent in Q3 FY22 driven by economies of scale, effective cost management marginally settled off by higher freight cost.

The company's momentum during nine month (April to December) of the financial year 2021-22 (9MFY22) has been aided by higher crop prices in the international markets as well as lower inventory in the system. Going forward, the company plans to deliver 20 per cent volumetric growth, aided by a mix of newly registered products as well as improvement in demand for its existing set of products, the brokerage firm Edelweiss Securities said.

Shares of Deepak Fertilisers and Petrochemicals Corporation have soared 57 per cent from level of Rs 416 during the period. In Q3FY22, the company’s consolidated net profit doubled to Rs 181 crore from Rs 89 crore, on healthy operational income. Revenue from operations grew 35 per cent YoY at Rs 1,956 crore as against Rs 1,447 crore in Q3FY21.

Operating earnings before interest tax and depreciation and amortization (EBITDA) for the quarter came in at Rs 352 crore, up 62 per cent YoY with corresponding EBITDA margin at 18.0 per cent, up 300 bps YoY.

The management said net profits during the quarter doubled owing to significant margin expansion in chemicals segment; whilst fertiliser segment faced challenges due to uncertainties around raw material availability and costs. Operating profit continued to build on growth momentum despite unfavourable raw material prices impacting Iso Propyl Alcohol and Fertiliser segment profitability, the company release stated.