Anand Rathi's research report on Sumitomo Chemicals
Sumitomo Chemical reported a decent performance in Q4FY26 with revenue/EBITDA/PAT growing by 1/12/12% y/y despite: (a) discontinuation of AND business; (b) soft Rabi demand; and (c) Biorational regulatory constraints. While domestic revenue rose by 7% y/y to Rs4.9bn, exports fell 13% y/y to Rs1.9bn, due to de-growth in Japan, Europe, North America and Asia. Gross margin rose 220bps y/y to 42.3%, while EBITDA margin grew 200bps y/y to 19.6% owing to favourable product-mix, disciplined channel management, initial price hikes and lower contribution from low-margin-AND business. Further, specialty/generics contributed 29/71% to revenue (flat on y/y basis). WC rose by 14 days y/y to 103 days in Mar-26 vs. 80/89days in Dec25/Mar-25, led by seasonal inventory build-up for Kharif season and calibrated stocking to ensure continual product availability partly offset by improved collection; and (c) rise in cash collection to Rs37.3bn in FY26 from Rs30.6bn in FY25.
Outlook
We maintain BUY rating on the stock with a revised TP of Rs570 (from Rs560 earlier), valuing it at 36x FY28e EPS.
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Sumitomo Chemicals - 2905026 - anand