Prabhudas Lilladher's research report on Sumitomo Chemical India
We trim our FY24/25E EPS estimates by 7%/6%, citing challenging environment both in domestic and exports markets in terms of higher channel inventory and pricing pressures. Sumitomo Chemicals India (SUMICHEM) reported lower than estimated results with Revenue/EBITDA/PAT decline of 2%/-26%/-3% YoY (PLe growth of 11%/10%/17% YoY) largely led by sluggishness in the domestic market (down 10% YoY), while exports continued to post double digit growth (up 14% YoY). Provisions on high cost inventory coupled with sheer pressure on realizations in key molecules also exerted pressure on margins (EBITDA margins down 400bps YoY). Going forward, management remains cautious on the domestic market citing higher inventory exerting pressure on revenue growth as well on margins (likely to take couple of quarters to normalize). While, double digit growth momentum likely to continue in exports segment (FY23 up 31% YoY) to be led by commercialization of new products (from 1QFY24).
Outlook
We expect Revenue/ EBITDA/PAT CAGR of 14%/18%/17% over FY23-25E (FY18-23 CAGR of 13%/25%/28%). Maintain ‘BUY’ with revised TP of Rs550 (Rs590 earlier) based on 40XFY25E EPS.
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