Sumitomo Chemical - Maintain Buy On Healthy Long-Term Fundamentals: Nirmal Bang

Nirmal Bang Report

We have maintained FY25E/FY26E and introduced FY27E besides rolling over estimates and target price to Sept’26E. We maintain Buy on Sumitomo Chemicals India Ltd. with a revised target price of Rs 629 using an unchanged PE of 38 times on Sept’26E EPS of Rs 16.55 (June-26E EPS of Rs 15.43 assigned earlier) versus five-year median PE of 41.5 times. Our target PE is supported by FY24-FY27E EPS compound annual growth rate of 31.8%.

Our Buy is based on an improved outlook for Sumitomo Chemical’s domestic crop protection chemical business, stabilising costs/prices and robust volume growth in 20s. This is positive for topline/earnings as per channel checks.

Other catalysts are progress in monsoon/2% growth in Kharif cropped area, which is likely to aid healthy pesticides demand and unlock gains from the new products launched in the last two years.

Sumitomo Chemical launched six new products in FY24 – three herbicides, one insecticide and two fungicides; it has launched 13 new products in the last 18 months.

The parent Sumitomo Chemical's thrust on India as a focus market, Bio/Specialty products and support for the company’s exports to the parent and other markets are added positives.

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