SUMICHEM - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.8

📊 Core Financials Overview

Profitability

ROE: 18.8% and ROCE: 25.1% are excellent, indicating strong capital efficiency and operational strength.

PAT rose from ₹98.4 Cr to ₹180 Cr QoQ, a 40% jump, reflecting robust earnings momentum.

EPS of ₹11.1 supports a P/E of 50.9, which is significantly higher than the industry average of 31.7—suggesting premium pricing.

Balance Sheet Health

Debt-to-equity ratio: 0.02 — virtually debt-free, a major positive.

Book Value: ₹58 vs Current Price: ₹565 → P/B ratio ~9.7, indicating aggressive valuation.

Dividend Yield: 0.21% — minimal, consistent with a growth-oriented reinvestment strategy.

Cash Flow & Stability

PEG ratio of 10.2 is elevated, implying overvaluation relative to growth.

RSI at 46.0 and MACD negative suggest neutral-to-weak technical momentum, with potential for consolidation.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 50.9 Overvalued vs industry PE of 31.7

P/B Ratio ~9.7 Premium pricing

PEG Ratio 10.2 Indicates stretched valuation

Intrinsic Value ~₹480–₹510 Estimated below current price

Sumitomo Chemical India Ltd appears overvalued, despite strong fundamentals.

🧪 Business Model & Competitive Edge

Sector: SUMICHEM operates in agrochemicals, public health insecticides, and animal nutrition, with a diversified product portfolio.

Strengths

Strong parentage from Sumitomo Chemical Japan

High-margin products and strong distribution network

Near-zero debt and consistent profitability

Challenges

High valuation multiples

PEG distortion due to recent earnings spike

Institutional interest remains flat (FII/DII change: +0.02%)

According to StockInvest, Q3 revenue fell 35% QoQ, but gross margins remained strong at 42.15%, and net profit margin held at 13.55%, indicating cost control and resilience.

📌 Entry Zone Recommendation

Suggested Entry Range: ₹480–₹510

Below 200 DMA (₹540) and closer to intrinsic value

RSI and MACD suggest waiting for technical confirmation before entry

🧭 Long-Term Holding Guidance

Hold if Already Invested: Strong fundamentals and sector tailwinds support long-term growth.

Accumulate on Dips: Especially near ₹500 for better margin of safety.

Watchlist Triggers

EPS consistency and margin expansion

Institutional accumulation

Regulatory tailwinds in agrochemicals

Sumitomo Chemical India is a high-quality player with global backing and strong execution, but its current valuation calls for patience. You can explore deeper insights on TopStockResearch’s fundamental dashboard.

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