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ICICI Securities Report
Sumitomo Chemical India Ltd. reported strong revenue growth of 23.2% YoY in Q2 FY23, driven by price-led domestic growth and volume-led growth in exports.
Gross margin contracted 110 basis points due to presence of high-cost inventory, but lower ‘other expenses' led to 121 bps YoY expansion in Ebitda margin.
Sumitomo continued to gain market share from smaller players in India agrochemical sector, which is discounted cash flow-accretive.
We believe, restrictions on the mode of application of glyphosates could hit volume sales in the near term, but it also offers an opportunity to supply value-added solutions to farmers. This would potentially result in market share gain for organised players.
We revise our earnings estimates to factor-in potential loss of glyphosate sales in the near term
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