Brokerage Raises This Chemicals Stock From Accumulate To Buy, Target Price Rs 543

1. Sumitomo Chemicals India Ltd Stock Performance & Return

The last trading price of the stock is Rs 471 apiece with an intraday gain of 0.73%. The 52-week high of the stock is Rs 540 apiece and 52-week low is Rs 341 apiece, respectively. The stock has given a return of 134% in last 5-years, 27% in last 1-year, and declined a little over 1% in last 3-months.

 

2. New Product Launches

Around 6-8 new launches have been planned over the next 18 months. We also see healthy outlook for exports growth going forward, especially to the LatAm market (revenue share up from 4% to 10% in FY22; 5%/6% in 2QFY23/1HFY23 vs 7% in 1QFY23), including to SCC affiliate.

Based on industry consensus, we believe that the positive agronomic conditions augur well for the Indian CPC sector in the FY23 Rabi season.

3. Risk

Crop/infestation growth being less than expected, delayed launch of new products, regulatory issues, lower-than-expected access to Japanese parent's innovator molecules & global reach and potential levy of royalty by the parent company.

4. Valuation

According to Nirmal Bang, "We have maintained FY23E/FY24E/FY25E estimates and TP at Rs543, valuing it at 35x PE on Sep24E EPS. We have raised the rating on SCIL from ACCUMULATE to BUY based on: (a) Improved risk-reward at current valuation and (b) The three-month stay order issued by the Delhi High Court over SCIL's domestic Glyphosate sales following the Government's notification last month on allowing application of Glyphosate herbicide only by PCOs. The stock is down 3.5% in three months and more than 10% from the closing price in the week ending Oct. 21, 2022 - the week before the Government's Oct. 25th order on mandating PCOs to apply Glyphosate."

5. About Sumitomo Chemicals India

Sumitomo Chemical India Ltd manufactures, imports and markets products for crop protection, grain fumigation, rodent control, bio pesticides, environmental health, professional pest control and feed additives for use in India. SCIL has also marked its presence in Africa and several other geographies of the world, according to its official website.

Disclaimer

The stock has been picked from the brokerage report of Nirmal Bang. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.