SUMICHEM - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.8

🧪 Sumitomo Chemical India Ltd (SUMICHEM) shows strong capital efficiency and low debt, but high valuation and weak technicals suggest a cautious accumulation strategy.

📈 Positive

• 📊 Capital Efficiency: ROCE of 25.1% and ROE of 18.8% reflect excellent operational performance.
• 📉 Low Leverage: Debt-to-equity ratio of 0.02 ensures financial stability and low risk.
• 💸 Dividend Yield: 0.24% offers modest income for shareholders.
• 📈 Institutional Confidence: DII holdings increased by 0.32%, showing domestic support.
• 🌿 Business Model: Strong presence in agrochemicals and specialty chemicals with diversified product portfolio.

⚠️ Limitation

• 💰 High Valuation: P/E of 46.4 is significantly above the industry average of 32.2.
• 📉 Elevated PEG Ratio: 9.26 suggests growth may not justify the premium.
• 📉 Technical Weakness: RSI at 35.0 and MACD at -11.5 indicate bearish momentum.
• 📉 Earnings Dip: PAT declined slightly from ₹180 Cr. to ₹178 Cr. with a 6.78% drop.
• 📉 Volume Drop: Current volume is significantly below weekly average.

📉 Company Negative News

• Stock down nearly 25% from 52-week high, reflecting valuation compression.
• Technical indicators suggest continued weakness in short-term price action.

📈 Company Positive News

• Strong brand equity and distribution network in agrochemical space.
• Expansion into specialty chemicals and crop protection enhances long-term growth visibility.
• Stable quarterly performance despite sector headwinds.

🏭 Industry

• Agrochemical and specialty chemical sector benefits from rising food demand and sustainable farming practices.
• Industry P/E of 32.2 reflects moderate valuation norms.
• Peers include UPL, PI Industries, and Rallis India.

🧾 Conclusion

• 📉 Entry Zone: ₹470–₹490 could be a favorable accumulation range based on RSI and support levels.
• 📈 Long-Term View: Hold for 3–5 years; strong fundamentals and sector tailwinds support sustained growth.
• 🔍 Valuation Watch: Consider phased entry or wait for earnings acceleration to justify current price.