ICICI Direct Maintains Buy Rating on Sumitomo Chemicals, Targets Rs 515

Sumitomo Chemical India Ltd. Shines as High-Growth Entity in Indian Agrochemical Sector

Sumitomo Chemical India Ltd. (SCIL), a subsidiary of Sumitomo Chemical Co., Ltd. (SCC), has emerged as a high-quality and high-growth entity within the Indian agrochemical sector. The company's core strengths lie in its robust domestic manufacturing capabilities and capital-efficient operations, as evident from its return on capital employed (RoCE) of over 18% and debt-to-equity (D/E) ratio of 0.02. This strategic relationship with its Japanese parent company allows SCIL to leverage proprietary technology and products of a global innovator, positioning it ahead of its peers.

Resilient 9MFY26 Results

Despite a weak third quarter, SCIL's 9MFY26 results have been resilient, with 5% earnings before interest, taxes, depreciation, and amortization (EBITDA) growth and 9% profit after tax (PAT) growth. This indicates that the company's strategy is successfully translating into material margin gains, even while global industry peers face cyclical challenges.

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Initiation of Coverage

We initiate coverage of SCIL with a BUY recommendation, with a target price of INR 515. This recommendation reflects our confidence in the company's ability to continue its growth trajectory and maintain its position as a leading player in the Indian agrochemical sector.

Note: The growth rates are based on 9MFY26 results and may not reflect the companies' current performance.

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