FY22 was a great year for Sharda, with sales growing by 49% and PAT by 52%. Management is confident of achieving 15-20% sales growth in FY23. My notes from concall is below.
- Focusing on expanding biocide registrations
- Recently there has been some impact on their Chinese shipments due to lockdowns where goods are stuck at ports. This hasn’t yet made much business impact as Q1 is a lean season
- Expecting to grow at 15-20% in FY23 (value wise). Expect to maintain gross margins in similar range (30% types)
- Have also shipped certain consignments through air to be a reliable supplier
- FY22 sales growth components: Volume (+) 24%, Price (+) 25% and (+) 1% through forex gain
- For Q4, volume (-) 11%, price (+) 42%. Currently selling prices are stable
- Main driver of growth in belt (non-agro) business is because of reliability of supplies and quality of products
- Margins have been impacted in belt business due to inflation in freight cost which form a significant proportion (15-25% of increase in freight costs had to be absorbed by Sharda). Overall margins in belt business is 17-18%
- Channel inventory dried up post covid which benefitted Sharda. It’s hard to estimate current state of channel inventory
- Gross margin breakup: EU (36%), NAFTA (29-30%), LATAM (15%), ROW (22%)
- FY23 capex should be 380-450 cr. FY22 capex was 413 cr. (some of this is expensed out, that’s why on cashflow statement it appears lower)
Disclosure: Invested (position size here, no transactions in last-30 days)