Sumitomo Chemicals Forecast to Reach Rs 570, Analysts Predicts

Sumitomo Chemical Reports Decent Q4FY26 Performance Despite Challenging Conditions

Sumitomo Chemical has reported a decent performance in Q4FY26, with revenue, EBITDA, and PAT growing by 1%, 12%, and 12% year-over-year (y/y) respectively. This growth comes despite several challenges faced by the company, including the discontinuation of its AND business, soft Rabi demand, and regulatory constraints on its Biorational products.

The company's domestic revenue rose by 7% y/y to Rs4.9 billion, while exports fell by 13% y/y to Rs1.9 billion. This decline in exports was attributed to de-growth in key markets such as Japan, Europe, North America, and Asia. However, the company's gross margin rose by 220 basis points y/y to 42.3%, while its EBITDA margin grew by 200 basis points y/y to 19.6%. This improvement in margins was driven by a favourable product mix, disciplined channel management, initial price hikes, and lower contribution from the low-margin AND business.

The company's specialty and generics segments contributed 29% and 71% to revenue respectively, with both segments performing flat on a y/y basis. Working capital (WC) rose by 14 days y/y to 103 days in Mar-26, compared to 80 days in Dec-25 and 89 days in Mar-25. This increase in WC was led by seasonal inventory build-up for the Kharif season and calibrated stocking to ensure continual product availability, partly offset by improved collection. Cash collection also rose to Rs37.3 billion in FY26 from Rs30.6 billion in FY25.

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We maintain a BUY rating on Sumitomo Chemical's stock with a revised target price (TP) of Rs570, valuing it at 36x FY28e EPS.