Sumitomo Chemical India Ltd. share price target

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SCI provides solutions for insecticide, herbicide, fungicide, plant growth regulator (PGR) under agro segment. Under animal nutrition, it manufactures methionine for feed additive use In terms of revenue contribution, insecticide constitutes ~51% while around...

further capacities in the medium term. Molecule-wise commercialisation should commence FY23 onwards. SUMICHEM also plans to buy 2 land parcels of 70 acres in total for its future expansion plans. We increase topline/EBITDA/APAT estimates by 2% for each of FY22 & FY23. Due to recent run-up in stock price, we downgrade the stock to REDUCE' (from HOLD), as upside looks capped because of expensive valuations (@ 43.5x FY23E EPS). We assign TP of Rs 376 (Previous 369) based on 38x FY23E EPS of Rs 9.9....

The company has announced a capex of | 100-110 crore for the five proprietary products, which it will supply to SCC Japan. The asset turn is expected to be between 2x and 2.5x. Out of the five molecules, one is expected to be commercialised by Q2FY22E while the remaining four would be altogether by the end of FY22 or beginning of FY23E. The management envisaged that they are setting up a capacity of 350 tonnes per year initially for one molecule, which is ~33% of the size of SCC Japan's consumption and, thus, bodes well for another expansion in coming years. We expect that...

We upgrade the stock of SUMICHEM to BUY' from Accumulate with revised target price of Rs 369 (Previous 336) based on 38x FY23E EPS of Rs 9.7. The company reported better than expected set of results driven by higher than anticipated demand. Gross margins expansion was lower than expected, but operating leverage benefit drove 393bps (PLe237 bps) improvement in EBITDA margin to 13.4%. Lower effective tax rate @ 12% aided PAT growth. The management plans to invest Rs 1.0-1.1 bn between FY22-FY23 for...

The company has been reducing share of generic portfolio from its basket and improving the share of speciality business, which should expand gross margins for the overall business ahead. Revenue from speciality business for 9MFY21 increased 17% YoY to | 718 crore while the same from generic remained at | 1393 crore (up 2% YoY). This expanded gross margins by 431 bps YoY to 37.4% for 9MFY21. Going ahead, we expect the focus to continue on improving speciality share given the management also expects to increase CRAMS revenue mix by introducing five technical over the next...

markets products for Crop Protection, Grain Fumigation, Rodent Control, Bio Pesticides, Environmental Health, Professional Pest control and Feed Additives for use in India. SCIL has also marked its presence in Africa and several other geographies of the world (accounting for ~20% of sales). The Company operates through three...

Many sectors in domestic market were impacted by pandemic and lockdown along with some disruptions on demand/supply side. Although agricultural sector remained immune during this turbulent phase, predominantly from the highest ever fertiliser sales ahead of Kharif season. This should somewhere bolster the growth outlook for agrochemicals as well. Thus, in this scenario it's prudent to invest in cherry picking stocks like Sumitomo Chemical (SUMITOMO CHEMICAL COMPANY JAPAN holds 78.30% stake currently). SUMICHEM's diversified portfolio, strong parentage, rich product pipeline from...

Given that majority of sectors in the domestic market were impacted due to lockdown along with demand/supply side challenges, only agricultural sector remained immune during this turbulent phase. This is evident from the fact of highest ever fertiliser sales ahead of Kharif season. This should also bolster the growth outlook for agrochemicals. Further, locust impact during Q1 should also improve the growth outlook for some agrochem companies like Sumitomo given it has a strong presence in few molecules for insecticide segment. H1 has around 65% share in overall revenue of the...

Incorporated in year 2000, Sumitomo Chemical India (SCI) is into agrochemical, animal nutrition and environmental health solutions. The company has been selling proprietary products of its parent in the domestic market. With the recent merger of Excel Crop Care (ECC), we expect the business portfolio of the merged entity to expand across different crops given the former is present in staple crops as against SCI that is in fruits & vegetables. Further, better distribution reach across key geographies in domestic as well as export markets would provide revenue synergies to the...