Dear Sir/Madam,
Please find enclosed the transcript of the conference call with Sharda Cropchem, held on 5th August, 2016.
Q1FY17 conference call: Key highlights
· Guidance: SCC has maintained FY17 volume growth guidance at 15-20% YoY. Management aims at sustaining EBITDA margin at 18-22% for FY17. This will be led by improved product portfolio and better penetration into Europe.
· Overall revenue: Agrochemical and non-agrochemical revenues accounted for 82% and 18% of Q1FY17 revenues (84% and 16% of Q1FY16 revenues), respectively.
· Revenue growth: Revenue grew 13.2% YoY in Q1FY17 primarily driven by an overall volume growth of 6% across geographies and favourable currency impact of 5% for the quarter.
· Geography-wise agrochemical revenues: Europe/NAFTA/RoW/Latam contributed 52.3%/26.2%/14.2%/7.3% (47%/30.4%/13.3%/9.4% in Q1FY17) to overall agrochemical revenues. For non-agrochemicals revenues, Europe/NAFTA/RoW/Latam regions contributed 28.4%/35.5%/18%/18.1% (30%/37.4%/15.1%/17.5% in Q1FY16). Management aims to increase the contribution from Europe from current 52-53% to 52-58% by FY17 end.
· Analysis of revenue by product profile: Formulations and active ingredients accounted for 93.2% and 6.8% (80.5% and 19.5% during Q1FY16) of overall revenues, respectively.
· Gross margin: Gross margin improved 373bps YoY to 35.8% led by volume growth and favourable exchange impact. Management has guided for gross margin to remain within the 33-35% range.
· Number of registrations: Total number of registrations increased to 1,830 as on June 30, 2016, compared to 1,765 as on March 31, 2016 The company added 65 registrations in Q1FY17. SCC has another 831 registrations (460 in Europe, 127 in NAFTA, 188 in LATAM and 56 in RoW) in the pipeline.
· Contribution from Top 10 molecules: Total revenue contribution from Top 10 molecules was 61.6% in Q1FY17 compared to 66.9% in Q1FY16.
· Europe: Volume and revenue growth stood at 25.8% and 23%, respectively.
· Latin America (Latam): Volume and revenue growth stood at 16.8% and 18.9% YoY, respectively.
· ROW: Volumes and revenues declined 46.9% and 14.1% YoY, respectively.
· NAFTA: Revenues and volumes dipped 12.9 % and 4.7%, respectively. Management highlighted that margin in NAFTA regions are likely to remain under pressure led by strong competition and currency pressure.
· Working capital: declined to 56 days as on June 30, 2016, versus 73 days in June 30, 2016. This was primarily on account of better credit available from suppliers. Management has guided for working capital days to rise to 82-100 at FY17 end due to increase in debtor days in Q4FY17. However, creditor days are likely to remain at same levels.
· Depreciation: Increased 39% YoY to INR127mn on back of new registrations.
· Capex: Management highlighted that it had spent USD17mn for new registrations in FY16. For FY17, it expects to spend USD15-18mn for new registrations.
· Net cash: Net cash stood at INR2.16bn as on June 30, 2016, versus INR1.5bn as on March 31, 2016.
Sharda Cropchem - conference call transcript-5-Aug-16
Regards,
Manish Mahawar +91 22 6623 3481 manish.mahawar@edelweissfin.co
Edelweiss Research +91 22 2286 4400
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