**Sumitmmo Chemical - Q4 FY20 (Audited –Cons)**
Total revenue from operations 445.7 Cr
421.7 Cr (5.71%) YoY | 523 Cr (-14.92%) QoQ
Year ending revenue: 2,424 Cr Vs. 2,228 Cr (8.79%)
Net Profit of 22.9 Cr
(1.1) Cr (2181.18%) YoY 0.60 Cr (3716.13%) QoQ
Year ending Net profit: 204.6 Cr Vs. 165.7 Cr (23.61%)
EPS (in Rs.) 0.46
(0.02) YoY | 0.01 QoQ
Year ending EPS: 4.10 Vs. 3.32
View: Result is overall good and fair. YoY revenue increased and profit increased multifold as YoY company posted losses and QoQ company posted very nominal profit.
**Business Updates & Highlights**:
Q4FY20 EBITDA is around INR 46.9 Cr Vs. 29.7 Cr in Q4FY19 therefore up by 57.9% in YoY and FY20 EBITDA is around INR 338.9 Cr Vs. 294.9 Cr in FY19 therefor up by at 14.9%.
Q4FY20 EBITDA margin is around 10.5% Vs. 7.01% in Q4FY19. FY20 EBITDA margin is around 13.9% Vs. 13.3% in FY19.
Q4FY20 Agro chemicals business which contributed around 90% in topline grew by 5.5% in YoY and others grew by 5.6% in YoY. Bottomline in agro chemicals business grew by 38% (*Very Positive*) in YoY and others grew by (37.8%).
**Recently the Government of India released a draft notification for public comments regarding proposed ban of some agro-chemical products. The list of products proposed to be banned includes some of the Company's products (two technical grade products and some other formulated products). The matter is being discussed at various forums such as various industry associations and farmers associations. Such forums and the Company are expected to take necessary actions to defend these products such as filing suitable explanations and technical justifications with authorities for favorable technical assessment and if necessary, other legal recourse. Based on the management understanding and expectations, the matter is not likely to have material adverse impact on the Company's operations as restrictions, if any, are not expected to be applicable to exports**
**Board of Directors has declared dividend for the F.Y. 2019-20 of Re 0.55 per equity share which is subject to the approval of the members in the Annual General Meeting**
ROE and ROCE is around 17% and 26% respectively and book value per share is around INR 21 and share is currently trading at 13.5x of its book value. Company is currently trading at annualized PE of around 69 which is high as per industry benchmark. Promoter holding is around 80.3% in the company which is very strong and stable. Insurance cos and Mutual fund hold around 3.7% and 0.9% in the company. Cash and cash equivalent from operating activities as of March 2020 is around INR 221.3 Cr Vs. 77.7 Cr as of March 2019 which is also very positive. Company is virtually debt free
Position: Share strong support price is INR 248/218. Long term investor should continue with the company for the target price of INR 400. Short term share can go till 295/310.
**Share View**: Share price high 281 (52 week) and now 274. Sumitomo Chemical India Ltd. (SCIL) manufactures, imports and 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.
Opportunities: Company product range comprises of conventional chemistry sourced from parent company, Sumitomo Chemical Company and biological products sourced from USA based subsidiary, Valent Biosciences LLC, a leader in producing a range of naturally occurring, environmentally compatible pesticides and plant growth regulators, for over 40 years. Strong management and highly follow corporate governance mechanism. Highly diversified product ranges which domestic and international market formulation. During this pandemic time also company business marginally impacted only due to logistics and supply chain related things.
Risk: Expensive valuation at present as compare to peers like Godrej Agro, Arti Ind, Vinati organics etc. although no direct competition or different product categories.
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.