Buy Sumitomo Chemical India: target of Rs 448: Sharekhan
Sharekhan is bullish on Sumitomo Chemical India has recommended buy rating on the stock with a target price of Rs 448 in its research report dated July 01, 2021.
July 02, 2021 / 01:30 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.
Sharekhan's research report on Sumitomo Chemical India
Robust export growth prospects led by 1) CRAMS opportunity from parent SCC (to supply five products worth Rs. 200-250 crore), 2) higher sales to LatAm (SCC acquired Nufram’s distribution business in LatAm) and 3) doubled capacity of tebuconazole. We expect a 13% revenue CAGR over FY21-24E. Focus on high margin PGRs/herbicides, rising share of specialty chemicals, further synergies from Excel Crop Care to drive 346 bps expansion in margins and take EBITDA margins to ~22% in FY24. Promising H1FY22 outlook in volume terms, price hikes and margin given good agronomics in India (above normal monsoon and higher crop prices in India) and adequate inventories to supply products in the upcoming Kharif season.
We maintain our Buy rating on SCIL with a revised PT of Rs. 448 as massive contract manufacturing opportunity from parent provides superior growth prospects and expect SCIL to enjoy premium valuation over domestic peers.
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