Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsBusinessStocks

Buy Sumitomo Chemical India; target of Rs 610: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Sumitomo Chemical India has recommended buy rating on the stock with a target price of Rs 610 in its research report dated October 31, 2022.

November 01, 2022 / 08:48 PM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Prabhudas Lilladher's research report on Sumitomo Chemical India

Sumitomo Chemical India (Sumitomo) reported robust set of numbers with revenue/EBITDA/PAT growth of 23%/30%/30% YoY during 2QFY23. Results were ahead of our and consensus estimate. Key highlights are: (a) Domestic and export revenue up +17% and +56% YoY in 1HFY23 respectively; (b) Specialty/generic contributed 30%/70%; (c) despite price hikes taken in the recent past to fully offset the inflated cost, however lower volume off-take particularly in glyphosate (volumes down ~40% YoY in 1HFY23) has in turn impacted the margins;(d) better operating leverage resulted into EBITDA margin expansion of 120bps YoY to 24.8% ;(e) WC up 22days YoY to 94 days led by higher inventory; (f) cash stood at Rs8.0bn in September’22; (g) Management hinted for Rs2.5bn capex in FY24; to provide better earnings visibility going forward We believe, Sumitomo will likely take a big leap given its (a) Comprehensive distribution network; (b) branded portfolio; (c) rising share of exports to overall revenues; (d) innovative product launches and (e) Parent's R&D capabilities that effectively anchor Sumitomo to outpace Indian agrochemical markets. Factoring in better 1HFY23 performance, we increase our FY23/24E estimates by 5%/3% respectively.

Outlook

We expect Sumitomo to post revenue/ EBITDA/PAT CAGR of 18%/21%/22% over FY22-25E (FY18-22 CAGR of 13%/29%/31%), respectively. We introduce and roll forward our valuations to FY25E. Maintain ‘BUY’ with revised TP of Rs610 (Rs510 earlier) based on 40xFY25E EPS.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Sumitomo Chemical - 01-11-2022 - prabhu

Broker Research
first published: Nov 1, 2022 08:48 pm

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347