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News: Sumitomo Chemical reported top-line de-growth of 27% YoY to Rs 724.2 crore. Gross margins declined by 405 bps YoY while sequentially it decreased by 21 bps to 31.1% owing to high raw material cost. EBITDA margins for the quarter decreased by 789 bps YoY and 123 bps QoQ to 11.1%. Absolute EBITDA de-grew by 57% YoY to Rs 80.6 crore against, tracking lower revenue and higher operating cost. Bottom-line de-grew by 55% YoY to ₹61.7 crore.
Views: Q1FY24 has been muted for most of the agrochemical players due to overall sluggish demand in the domestic market and international market along with higher inventory piling up at customer's end coupled with delayed sowing, pricing pressure and deferred purchasing decisions by trade partners. Gross margins remained lower due to high-cost volatility for raw materials in the market. For Q2FY24 performance, we continue to monitor distribution and timing of rainfall besides development on the global inventory front in the backdrop of aggressive Chinese channel filing post Covid.
Impact: Negative