This agrochemicals stock has zoomed 58% in four trading days in weak market

Shares of Sharda Cropchem hit a new high of Rs 578.35 after they rallied 10 per cent on the BSE in Thursday's in intra-day trade, in an otherwise weak market, extending its past three days' surge. The stock has been surging after the company's December quarter (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 the past four trading days, the market price of Sharda Cropchem has zoomed 58 per cent, as compared to 5 per cent decline in the S&P BSE Sensex during the same period.

In Q3FY22, the company's revenue grew by 78.2 per cent 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. As of December 2021, Sharda Cropchem has 2,645 registrations in place, while nearly 1,099 registrations are at different stages of approval.

"The company has delivered robust operational performance over 9MFY22 with impressive 64.1 per cent YoY top-line growth. Factoring lower inventory in the system, as well as higher crop prices, we expect Q4FY22 to remain bumper," analysts at Edelweiss Securities said in result update. The brokerage firm maintains "BUY" rating on the stock with target price of Rs 615.

At 12:17 pm, the stock was up 9 per cent at Rs 575.45 on the BSE, as against a 2.4 per cent decline in the S&P BSE Sensex. The trading volume at the counter jumped over three-fold with a combined 3.9 million equity shares changing hands on the NSE and BSE.