Sharda Cropchem Q1 FY27: Operating performance improves as forex normalises

/n# Sharda Cropchem Q1 FY27: Operating performance improves as forex normalises/n/nSharda Cropchem began FY27 with steady operating momentum, even as reported profit numbers were held back by a sharp drop in forex gains. For the quarter ended 30 June 2026 (Q1 FY27), consolidated revenue from operations rose to 1,073.8 crore, up 9% year on year. Gross profit increased 13% to 394 crore and EBITDA grew 25% to 178.4 crore, taking the EBITDA margin to 16.6%, up 220 basis points.

The reported PAT, however, declined to 88 crore from 142.8 crore in Q1 FY26. Management attributed the decline largely to a lower forex gain of 7.5 crore versus 73.1 crore last year, which they explained as mostly unrealised gains and losses from revaluation of foreign currency receivables and payables at the balance sheet date. On a like to like basis, profit before tax prior to forex gains rose 16% year on year to 110.9 crore, reflecting stronger underlying execution.

Segment performance: agro remains core, non agro adds incremental growth

Sharda Cropchem operates two segments on a shared platform of sourcing, logistics and distribution. In Q1 FY27, the agrochemical segment delivered revenue of 915 crore, up 8% year on year, while the non agrochemical segment grew 15% to 159 crore. Together they took total quarterly revenue to 1,074 crore.

Within agrochemicals, product category revenues showed herbicides as the largest bucket at 457 crore, followed by insecticides at 233 crore and fungicides at 225 crore. These figures point to a diversified crop protection mix, though management noted that quarter level product mix and geography shifts can influence realisations.

Regional mix: Europe softens, NAFTA and LATAM accelerate

The quarter’s most visible swing came from regional performance in agrochemicals. Europe, historically the largest market, reported agro revenue of 467 crore, down 11% year on year. Management linked this to distributor cutbacks driven by unusual heatwave conditions in parts of Europe, and described it as a temporary destocking phase.

At the same time, other regions offset the softness. NAFTA agro revenue rose 33% to 339 crore, LATAM grew 52% to 72 crore, and rest of world increased 78% to 37 crore. In the concall, management indicated that Europe restocking has improved and has largely normalised.

On profitability, management shared region wise gross margins for Q1 FY27: Europe at 44.2%, NAFTA at 32.8%, LATAM at 16.9%, and rest of world at 30.8%, with overall gross margin at 36.7%. Notably, Europe margins improved year on year even as volumes declined, reinforcing the region’s structural attractiveness when demand conditions normalise.

Registration led platform and investment pipeline

The company continues to position itself as an IP driven, registration led agrochemical player. As of 30 June 2026, total registrations stood at 3,016, up from 3,011 at 31 March 2026. Management also stated that 1,027 applications were at the approval stage globally.

Sharda’s operating model remains asset light. Management reiterated that the company does not manufacture and gets products manufactured primarily from China through partners. This keeps fixed capital low but implies a dependence on external supply networks.

Investment in registrations remains a core lever. Management maintained that the process is uncertain and difficult to time, but reiterated sustained spend levels. In Q1 FY27, the company incurred 263 crore of capex, which management said was unusually high due to data compensation and should not be extrapolated linearly. For FY27, management indicated investment could be around 480 to 550 crore, with a broad expectation of roughly 500 crore.

The CFO also highlighted that sustained intangible capex translates into higher amortisation over time. Depreciation and amortisation stood at 100.3 crore in Q1 FY27, and management indicated annualised depreciation and amortisation could be around 370 to 375 crore.

Balance sheet: debt free with improving working capital

Sharda ended the quarter with a strong balance sheet. Total equity stood at 3,245 crore as of 30 June 2026 compared to 3,137 crore at 31 March 2026. The company stated it remains debt free and reported cash, bank and liquid investments of 767 crore versus 702 crore at March end.

Working capital discipline also improved. Working capital days reduced to 88 days from 98 days between March 2026 and June 2026. The presentation showed receivable days declining from 151 to 110 days, while inventory days increased from 72 to 81 days and creditor days reduced from 125 to 103 days.

Outlook and what to track

Management maintained FY27 guidance of 10% to 15% revenue growth and gross margins around 35%, later indicating a 35% to 37% band. EBITDA margin guidance for the year was stated at 18% to 20%. Management also indicated an expectation of 5% to 10% volume growth for FY27.

The key swing factor for the near term remains Europe volumes after the Q1 destocking phase. At the same time, NAFTA and LATAM delivered strong growth in Q1, providing diversification. Another variable for reported earnings is forex, which management described as largely unrealised revaluation impacts that can distort quarter on quarter profit comparisons.

Overall, the quarter reinforced the company’s thesis as a registration led, asset light global agrochemical platform. Operating metrics improved, liquidity remained strong, and guidance was reiterated, while headline PAT volatility was driven primarily by forex normalisation rather than a deterioration in core profitability.