Bad nos continue from the export side of agchem due to very high inventory, falling AI prices and lower demand. Sharda reported 38% decline in revenues and was able make 11% EBITDA margin, which is quite good compared to its peers like UPL (1% margin), NACL (1% margin), Meghmani (losses), Astec (losses), etc. Concall notes below.
FY24Q3
- Q3 inventory hit: 7 cr. (91 cr. in 9MFY24)
- Q3 overall growth breakup: (-)38%; volume (-)20.8%, price & product mix: (-)19.4%, currency exchange +2.3%
- For Q3, agchem volume reduced by (-21%) and non-agchem volume reduced by (-16%)
- Q4 Gross margin breakup: EU (36.4%), NAFTA (12%), LATAM (31%), ROW (25%)
- Q3 Volume: EU (-13%), LATAM (19.3), NAFTA (-35.3%), ROW: 5%
- NAFTA has hurt them the most, both in terms of volumes and realizations
- Debtors have reduced from 1830 cr. in Q4FY23 to 890 cr. in Q3FY24 (same as Q2FY24)
- Q3 net cash: 370 cr
- Droughts in Europe and storms in USA have affected demand, expect gradual recovery
- Expecting 4th quarter to be better but demand is bad currently
- Engage 300+ consultants outside India (18.5% increase YOY), professional charges have increased by 48.4%
- Inventory levels are very high, some Chinese companies have reduced production and those with multiple plants have closed some plants. Customers are not overstocking because inventory is in abundance
- Most of non-agchem business is replacement business from resellers
- 9MFY24 capex: 276 cr. (expect 350-400 cr.)
Disclosure: Invested (position size here, no transactions in last-30 days)