Sharda came with a horrific set of nos, they took an inventory markdown of 71 cr. and sales returns of 135 cr. As a result, their sales declined by 23% and they reported 89 cr. of losses. Situation looks grim currently, with prices of technicals going down severely (50-80%). This coupled with some weather issues has also dented demand in certain markets (likes of LATAM). Management is expecting this to improve in 6 month time. Concall notes below:
FY24Q1
- High price inventory: Revalued entire inventory down by 71 cr. to reflect prevailing prices. Current inventory is 953 cr. which is higher because of high amount of sales return from customers (135 cr. of sales return)
- Many customers have returned high priced inventory due to sharp contraction in prices
- For Q1, overall volume are (-)11%, price & product mix change (-)18%, currency exchange (+)6.5%
- Volume breakup: Europe (-)37%, NAFTA (+)49%, LATAM (-)53%, ROW (+)47%
- 2800 registrations is for 130-150 molecules
- Excess production in China and weak domestic demand for them has resulted in pressure on prices, current prices are below pre-covid levels
- Inventory overhang is so huge in China that a number of factories have to be shut and price decline has been the highest in last 20-30 years
- Non-agchem business has done very well because they don’t maintain inventory for that, all the demand is made to order
- FY24 guidance: Revenue growth of 10% (from 15% earlier) with 15% EBITDA margin
- FY24 Capex: 400 cr.
Disclosure: Invested (position size here, sold shares in last-30 days)