Sumitomo Chemical India Ltd. share price target

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.

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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...