Sumitomo Chemical India Ltd. share price target

Below consensus and as we estimated, Sumitomo’s Q2 was weak; revenue/EBITDA/PAT fell 6/11/8% y/y. Domestic revenue down 4% y/y to Rs7.7bn; exports down 13% y/y to Rs1.6bn.

Ahead of consensus & our estimates, Sumitomo’s Q1 was robust; revenue/EBITDA/PAT grew 26/36/41% y/y. Domestic revenue up 29% y/y; exports 9% y/y.

Sumitomo Chemical (Sumitomo) reported subdued 4Q numbers below our and consensus estimates with flat revenue growth while EBITDA and PAT declined by 15% and 9% y/y respectively.

With revenue/EBITDA/PAT up 18%/61%/59% y/y, Sumitomo Chemicals reported decent Q3 results, though marginally lower than our estimates and the consensus.

Sumitomo’s reported revenue of Rs. 988 crore, marking a 9% increase compared to the same period last year and an 18% rise from the previous quarter, exceeding our projections by 5%.

Company reported a revenue of Rs. 674 crore (up 3.5% y-o-y and 24.4% q-o-q), in line with expectations. Operating margin at 20.8% (up 840 bps y-o-y) was far ahead than expectations of 16.2%. The margin beat
was led by high gross margins as the company had liquidated all the high cost inventory by Q2. PAT of Rs. 110 crore was up 52% y-o-y.

Sumitomo’s Q3FY23 was impacted by multiple one-offs such as (1) prolonged monsoon delayed sowing in Rabi season, (2) higher inventory in trade from Kharif season impacted primary sales in Q3FY23 and (3) there were lower sales of fungicides due to shift of agri cycle.

Sumitomo reported strong revenue growth of 23.2% YoY in Q2FY23, driven by price-led domestic growth and volume-led growth in exports.

Sumitomo Chemicals reported strong revenue growth of 26% YoY during the quarter in-spite of delayed monsoon.