Buy Sumitomo Chemical India, target price Rs 465 : Sharekhan by BNP Paribas

Sharekhan by BNP Paribas has buy call on Sumitomo Chemical India with a target price of Rs 465.The current market price of Sumitomo Chemical India is Rs 388.8.

Sumitomo Chemical India, incorporated in the year 2000, is a Small Cap company (having a market cap of Rs 19366.85 Crore) operating in Pesticides/Agro Chemicals sector.

Sumitomo Chemical India key Products/Revenue Segments include Agrochemicals, Export Incentives, Other Operating Revenue, Commission and Sale of services for the year ending 31-Mar-2022.


Financials
For the quarter ended 31-03-2023, the company has reported a Consolidated Total Income of Rs 668.06 Crore, down -12.88 % from last quarter Total Income of Rs 766.83 Crore and down -.65 % from last year same quarter Total Income of Rs 672.42 Crore. Company has reported net profit after tax of Rs 72.12 Crore in latest quarter.

The company’s top management includes Mr.Mukul G Asher, Mr.Chetan Shah, Mr.Sushil Marfatia, Mr.Hiroyoshi Mukai, Mr.B V Bhargava, Mr.Ninad D Gupte, Mr.Tadashi Katayama, Mr.Masanori Uzawa, Ms.Preeti Mehta. Company has SRBC & Co LLP as its auditors. As on 31-03-2023, the company has a total of 50 Crore shares outstanding.

Investment Rationale
Near-term challenges may persist due to high channel inventory and impact on product price due to oversupply from China. Having said that, SCIL’s strong parental advantage (robust R&D capabilities, global distribution, and financial strength) provides massive contract manufacturing opportunity and would drive superior earnings growth versus domestic peers. The company’s balance sheet is also strong with cash, cash equivalent, and liquid investments of Rs.827 crore as of March 2023. Thus, the brokerage believes SCIL would continue to enjoy premium valuations.

Promoter/FII Holdings
Promoters held 75.0 per cent stake in the company as of 31-Mar-2023, while FIIs owned 2.4 per cent, DIIs 5.49 per cent.