Buy Sumitomo Chemical India: target of Rs 350: Sharekhan

Sharekhan is bullish on Sumitomo Chemical India has recommended buy rating on the stock with a target price of Rs 350 in its research report dated March 17, 2021.

Broker Research

March 18, 2021 / 02:00 PM IST

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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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