SUMICHEM - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.7
| Stock Code | SUMICHEM | Market Cap | 23,450 Cr. | Current Price | 470 ₹ | High / Low | 665 ₹ |
| Stock P/E | 43.2 | Book Value | 64.0 ₹ | Dividend Yield | 0.26 % | ROCE | 25.1 % |
| ROE | 18.8 % | Face Value | 10.0 ₹ | DMA 50 | 439 ₹ | DMA 200 | 459 ₹ |
| Chg in FII Hold | 0.04 % | Chg in DII Hold | 0.33 % | PAT Qtr | 86.2 Cr. | PAT Prev Qtr | 178 Cr. |
| RSI | 56.5 | MACD | 10.7 | Volume | 2,26,192 | Avg Vol 1Wk | 3,50,257 |
| Low price | 363 ₹ | High price | 665 ₹ | PEG Ratio | 8.63 | Debt to equity | 0.02 |
| 52w Index | 35.4 % | Qtr Profit Var | 2.27 % | EPS | 10.6 ₹ | Industry PE | 24.4 |
📊 Core Financials
- Revenue & Profit: Quarterly PAT ₹86.2 Cr. vs ₹178 Cr. previous quarter, showing a sharp decline.
- Margins: ROE at 18.8% and ROCE at 25.1% reflect strong efficiency and profitability.
- Debt: Debt-to-equity ratio of 0.02 indicates negligible leverage, very healthy balance sheet.
- Cash Flow: Stable due to low debt burden, though earnings volatility is a concern.
💹 Valuation Indicators
- P/E Ratio: 43.2 vs Industry PE of 24.4 — significantly higher, suggesting overvaluation.
- P/B Ratio: Price ₹470 vs Book Value ₹64 → ~7.34x, expensive relative to assets.
- PEG Ratio: 8.63 indicates overvaluation relative to growth prospects.
- Intrinsic Value: Current price appears stretched compared to fundamentals.
🏭 Business Model & Advantage
Sumitomo Chemical India (SUMICHEM) operates in agrochemicals, specialty chemicals, and environmental health solutions. Its competitive advantage lies in strong R&D, diversified product portfolio, and global parent backing. However, earnings are cyclical and sensitive to raw material costs.
📈 Technicals & Entry Zone
- RSI at 56.5 indicates neutral momentum.
- MACD positive (10.7) suggests short-term bullishness.
- Entry Zone: Attractive accumulation only if price corrects to ₹400–₹430 range.
- Long-term Holding: Suitable for investors seeking exposure to agrochemicals, but valuation risks remain.
✅ Positive
- Strong ROCE (25.1%) and ROE (18.8%).
- Negligible debt-to-equity ratio (0.02).
- Global parent company support ensures stability.
⚠️ Limitation
- High P/E ratio (43.2) compared to industry average.
- PEG ratio (8.63) signals overvaluation.
- Quarterly profit decline from ₹178 Cr. to ₹86.2 Cr.
📰 Company Negative News
- Sharp drop in quarterly PAT.
- Valuation multiples significantly above industry norms.
🌟 Company Positive News
- Strong efficiency metrics (ROCE, ROE).
- FII (+0.04%) and DII (+0.33%) holdings increased.
- Low debt ensures financial resilience.
🏭 Industry
Agrochemical industry PE at 24.4 reflects moderate valuations. Demand is driven by agriculture modernization and crop protection needs. However, raw material costs and regulatory pressures remain key risks.
🔎 Conclusion
SUMICHEM shows strong efficiency and negligible debt, but current valuations are stretched with high P/E and PEG ratios. Earnings volatility adds risk. Long-term investors may consider accumulating only on corrections to the ₹400–₹430 range, aligning with industry demand growth but mindful of valuation risks.
For a broader perspective, you could explore a peer comparison or an industry outlook to complement this analysis.