This agrochemical stock zoomed over 100% in 2018

Shares of agrochemicals company Excel Crop Care hit a new high of Rs 4,462, up 7% on Monday, extending Friday’s 7% rally, after the company reported a strong 61% year on year (yoy) growth in standalone net profit at Rs 385 million for the first quarter of the financial year 2018-19 (Q1FY19). The company had a profit of Rs 239 million in the same quarter of the financial year 2017-18 (Q1FY18).

Operational revenue during the quarter under review jumped 34.7% yoy at Rs 3,997 million against Rs 2,968 million in the corresponding quarter of previous fiscal. EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin improved 15.8% in Q1FY19 from 13.33% in Q1FY18.

Commenting on the results, Chetan Shah, Managing Director said “Q1 has been a landmark quarter for the Company. Concerted efforts on the business, strong demand and optimisation of costs led to a sharp growth in the revenues. This was supported by a healthy monsoon expectation and consequent boosting of rural income. These factors have propelled the Company to deliver its best quarter results so far”.

Thus far in the calendar year, 2018, Excel Crop Care stock has outperformed the market by surging 123% from Rs 2,004 as December 29, 2017. On comparison, the S&P BSE Sensex rise 9% during the same period.

In November 2016, Japanese conglomerate Sumitomo Chemical acquired a majority stake in Mumbai-based Excel Crop Care, the Shroff Family, the then Promoters.

The year FY18 was a year of consolidation post acquisition of a majority stake in the Company by Sumitomo Chemical Company, Japan (SCC). New product launches, renewed focus on markets, synergising with Sumitomo Chemical India Private Limited (SCIPL) led to consolidated revenue from operations for FY18 of Rs 11.49 billion registering a healthy growth of 20.9% as compared to that for FY17.

The board maintains an optimistic outlook for the Company in the coming years. The growth in turnover in FY 2017-18 saw capacities of some of the products being optimally used.

In the coming years, the Company plans to invest every year on an average of around 5% of its consolidated net operating revenue in capacity expansion and for upgradation of manufacturing facilities. This includes planned investment for certain molecules of SCC which are under evaluation and if crystallized, the full benefits of this investment would be incremental and realized over a longer term period.

The expanded capacities, higher production, and higher sales are expected to result in improved absorption of overheads which in turn will ensure conservation of margins and maintain similar margins in the coming years, Excel Crop Care said in a statement.

At 10:52 am; the stock was trading 3% higher at Rs 4,290 on the BSE, as compared to a 0.1% fall in the S&P BSE Sensex. A combined 25,826 equity shares changed hands on the counter on the BSE and NSE so far.