Anand Rathi's research report on Sumitomo Chemical
Sumitomo Chemical (Sumitomo) reported subdued 4Q numbers below our and consensus estimates with flat revenue growth while EBITDA and PAT declined by 15% and 9% y/y respectively. Key highlights are: a) Domestic revenues up 18% y/y; exports down 22% y/y in 4Q’25. b) Exports sluggish due to lower revenues from LATAM and Africa down 30%/24% y/y. c) GM’s contracted by 170bps y/y/210bps q/q to 40% led by pricing pressure in the exports markets. d) Specialty/generic contributed 29%/71% in 4QFY25 v/s 31%/69% in the same period last year. e) Barrix Agro sciences (Subsidiary) delivered remarkable performance with revenue growth of 82% y/y in FY25, with positive EBITDA margins of 16% v/s 15% negative in FY24. f) two new capex announced- 1) 2nd plant for a key SCC product at Bhavnagar with capital investment of Rs550mn to be completed by 4QFY27, and 2) product innovation of a newly launched innovated molecule at Tarapur with capital outlay of Rs100mn to be completed by 4QFY27.
Outlook
Factoring in FY25 performance, we marginally trim our FY26e/27e EPS 3%/2%. We expect the company to clock 18%/23% revenue/PAT CAGRs over FY25-27. We maintain a Buy rating, with a revised TP of Rs620 (earlier Rs630), 40x FY27e EPS.
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