Heard the conference call recording post Q2. The biggest highlight of this quarter’s result is forex losses due to dollar strengthening vs euro.
During last 35-40 years(referring the chart below). Such a depreciation of euro against dollar have taken place only on two occasions. Around 1985 (Sharda did not exist then) and around 2002 (Sharda must be quite smaller back then)
Sharda’s business is facing quite a rare situation. The war between Russia and Ukraine along with interest rate hardening by US-Fed is likely to keep dollar stronger. Not withstanding what company has mentioned in the investor presentation and the impression they try to give during the investor conference, there are only few things that I think are happening to get forex situation normalized for Sharda
- The company wait for dollar to euro equation to normalize – less probable in near term
- Company re-negotiate with customers for better pricing – Thankfully they don’t have very long term contracts with customers(as mentioned during the last conf. by Mr. Bubna)
- Company increase the proportion of their revenue from NAFTA region. – again this would be gradual. But there are green shoot, for agro-chem as well as non-agro-chem they have shown more than 15% YoY revenue growth in NAFTA whereas For Europe, there have been 11% growth in Agrochem & 22% degrowth in Non-Agrochem segments.
There is slight increase in profitability in Q2 compared to Q1. But pre-Q1 level profitability seems to be few quarters away from now.
@harsh.beria93 Would appreciate your thoughts on – how do you see company’s trajectory for growth and profitability
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