Buy Sumitomo Chemical India; target of Rs 370: Anand Rathi
Anand Rathi is bullish on Sumitomo Chemical India has recommended buy rating on the stock with a target price of Rs 370 in its research report dated Jun 01, 2021.
June 10, 2021 / 12:19 PM IST
An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.
Anand Rathi's research report on Sumitomo Chemical India
Robust Q4FY2021 results with better-than-expected revenue growth of 19.6% y-o-y to Rs. 534 crore and 81 bps beat in OPM at 13.4% (up 408 bps y-o-y). Operating profit/PAT at Rs. 71 crore/Rs. 54 crore, up 72%/128% y-o-y and beat of 20%/40% versus our estimate. Strong revenue growth was led by growth across product categories (excluding herbicides). Revenue from insecticides/PGR/metal phosphides/fungicides/AND & EHD up 15%/52%/82%/20%/15% y-o-y. Capex in existing products and new capex of Rs. 100 crore -110 crore for five proprietary products (revenue potential of Rs. 200 crore - 250 crore) for supply to the parent would drive industry-leading revenue growth.
We expect Sumitomo Chemical India Limited (SCIL) to continue to enjoy premium valuation over domestic peers, given massive contract manufacturing opportunity from the parent and robust balance sheet. Hence, we maintain Buy on SCIL with a revised PT of Rs. 370.
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