Sharda Cropchem Is An Outperformer With 43% Gains Potential

Sharda Cropchem (Sharda) is a differentiated model in India’s agrochemicals space with focus on exports (>95% of revenues) and nil investments in manufacturing assets. Sharda seeks to leverage its strong understanding of complex regulatory issues to secure expensive product registrations in regulated markets and cater to this demand through supplies from Chinese vendors. With US$128m sales (83% agrochemical sales) in FY14 and a steadily growing portfolio of new registrations in the EU/ US, we see strong growth ahead for Sharda (25%/24% revenue/ earnings CAGR over FY14-17E; ~27% RoCE in FY17E). We initiate coverage on the stock with Outperformer and a price target of 358.