SUMICHEM - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.7
| Stock Code | SUMICHEM | Market Cap | 20,865 Cr. | Current Price | 417 ₹ | High / Low | 665 ₹ |
| Stock P/E | 38.5 | Book Value | 64.0 ₹ | Dividend Yield | 0.29 % | ROCE | 25.1 % |
| ROE | 18.8 % | Face Value | 10.0 ₹ | DMA 50 | 450 ₹ | DMA 200 | 497 ₹ |
| Chg in FII Hold | -0.28 % | Chg in DII Hold | 0.18 % | PAT Qtr | 86.2 Cr. | PAT Prev Qtr | 178 Cr. |
| RSI | 41.0 | MACD | -13.2 | Volume | 3,51,844 | Avg Vol 1Wk | 8,47,864 |
| Low price | 396 ₹ | High price | 665 ₹ | PEG Ratio | 7.68 | Debt to equity | 0.02 |
| 52w Index | 7.83 % | Qtr Profit Var | 2.27 % | EPS | 10.6 ₹ | Industry PE | 27.7 |
💰 Financials: Sumitomo Chemical India (SUMICHEM) maintains strong efficiency with ROCE at 25.1% and ROE at 18.8%, reflecting effective capital utilization and shareholder returns. The company is virtually debt-free with a debt-to-equity ratio of 0.02, ensuring financial stability. However, quarterly PAT dropped significantly from ₹178 Cr. to ₹86.2 Cr., highlighting earnings volatility. Cash flows remain supported by diversified agrochemical and specialty chemical operations.
📊 Valuation: Current P/E of 38.5 is well above the industry average of 27.7, indicating premium valuation. P/B ratio (~6.5) is high relative to book value of ₹64, suggesting expensive pricing. PEG ratio of 7.68 signals overvaluation compared to growth prospects. Intrinsic value assessment suggests the stock is trading above fair value, requiring caution for fresh entries.
🏭 Business Model & Competitive Advantage: SUMICHEM operates across agrochemicals, specialty chemicals, and environmental solutions. Its competitive edge lies in strong parentage (Sumitomo Chemical Japan), advanced R&D capabilities, and a diversified product portfolio. Rising demand in agriculture and specialty chemicals supports long-term growth, though margins remain sensitive to raw material costs and global supply chain dynamics.
📈 Entry Zone: Considering DMA 50 (₹450) and DMA 200 (₹497), accumulation is attractive only if the price dips below ₹400–₹410. Long-term investors should hold cautiously, as valuations are stretched despite strong fundamentals.
Positive
- High ROCE (25.1%) and ROE (18.8%) reflect strong efficiency.
- Debt-to-equity ratio of 0.02 indicates a virtually debt-free balance sheet.
- Strong parentage and R&D support from Sumitomo Chemical Japan.
- Diversified product portfolio across agrochemicals and specialty chemicals.
Limitation
- High P/E (38.5) compared to industry average (27.7).
- P/B ratio (~6.5) suggests expensive valuation.
- PEG ratio of 7.68 signals overvaluation relative to growth.
- Quarterly PAT decline from ₹178 Cr. to ₹86.2 Cr.
Company Negative News
- Sharp quarterly profit decline raises concerns about earnings stability.
- Reduction in FII holdings (-0.28%).
Company Positive News
- Marginal increase in DII holdings (+0.18%).
- Strong long-term fundamentals supported by global parent company.
Industry
- Agrochemical industry P/E at 27.7 indicates SUMICHEM trades at a premium.
- Sector growth driven by rising agricultural demand and specialty chemical applications.
- Global supply chain volatility and raw material costs remain key risks.
Conclusion
🔑 SUMICHEM is a fundamentally strong company with high efficiency, low debt, and strong parentage. However, stretched valuations and recent profit decline limit near-term attractiveness. Entry below ₹400–₹410 offers a better risk-reward balance. Long-term holding is justified for investors seeking exposure to agrochemicals and specialty chemicals, but caution is advised due to premium pricing.
Would you like me to extend this into a comparative HTML snapshot against peers like UPL and PI Industries to highlight valuation and efficiency differences?