- 04 Feb 2022
- ICICIdirect Research
Sumitomo reports strong growth across all parametersSUMICHEM - 401 Change: -0.05 (-0.01 %)
News: Sumitomo reported topline growth of 26% YoY to Rs.707.2 crore vs. our expectations of Rs.644.1 crore (consensus estimates Rs.620 crore). Revenue from agrochemical segment was up by 25.3% YoY to Rs.638.7 crore, while the same from other segment remained at Rs.68.5 crore (+33.8% YoY). We believe glyphosate prices were hovering at higher levels, which should have supported growth for the herbicide segment. Apart from this,. We also expect strong exports growth should have led better performance for Sumitomo India this quarter. OPM for the quarter expanded by 400bps YoY to 17.9% leading to EBITDA growth of 62% YoY to Rs.126.5 crore as against our estimates of Rs.108.6 crore (consensus estimates Rs.88 crore). The EBITDA from agrochemical business remained at Rs.122.3 crore (+65% YoY), while the same from other segments was Rs.4.2 crore (+5% YoY). Strong operational performance led bottom-line to grow at 64% YoY to Rs.88.9 crore against our estimates of Rs.78.1 crore (consensus estimates Rs.61 crore).
Views: SCC Japan led strong growth in the LATAM, North America & Europe and it is upbeat with the commentary of maintaining growth momentum there. Since there is an expectations of higher glyphosate prices to prevail this year as well, one can expect better performance from herbicide segment of Sumitomo India. Moreover, its speciality segment has been witnessing strong growth and thereby one can expect sustainability of operational performance. We believe, on the longer time frame, the story remains intake given that SCC Japan’s plans to outsource part of their technical requirements to Sumitomo Chemical India. Further, Nufarm can also aid strong revenue visibly for Sumitomo chemical India going ahead.