Sharekhan has given Buy recommendation for Sumitomo Chemical India with a target price of Rs. 350 in its research report issued on Mar 17, 2021

Sharekhan’s research report on Sumitomo Chemical India

Strong parentage offers competitive edge in terms of technical capabilities, strong distribution and R&D support would drive 12% CAGR in revenue and a 291 bps rise in margins over FY21E-FY23E. Merger with Excel Crop Care (ECCL) has strengthened generic product portfolio and geographical reach. Leveraging on parent and merger synergies would aid a 21% CAGR in PAT over FY21E-FY23E. Robust balance sheet with net cash (including liquid investment) of Rs. 680 crore and high asset turnover ratio would keep RoE/RoCE high at 24%/32%. We expect SCIL to continue enjoying premium valuation over domestic peers.

Outlook

We initiate coverage on Sumitomo Chemical India Ltd. with a Buy and PT of Rs. 350; SCIL is part of Sumitomo Chemical Company (Japan) and a leading player with an 11% share in domestic agri-input market.

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