SUMICHEM - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.2

🌱 Fundamental Analysis: Sumitomo Chemical India Ltd (SUMICHEM)

Strengths

ROCE (24.7%) & ROE (18.5%): Excellent capital efficiency and shareholder returns.

Debt-to-Equity (0.02): Virtually debt-free, ideal for long-term stability.

Strong EPS (₹10.1) and consistent PAT growth over time.

Sector Leadership: Dominant player in agrochemicals with global parentage and R&D pipeline.

Export Growth: Latin America and Europe showing strong traction

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Concerns

High P/E (61.2) vs Industry P/E (36.5): Valuation is stretched.

PEG Ratio (10.8): Indicates overvaluation relative to earnings growth.

Dividend Yield (0.20%): Minimal income generation.

Quarterly Profit Decline (-9.23%): Indicates margin pressure or seasonal impact.

📉 Technical & Trend Analysis

RSI (67.4): Near overbought zone, caution advised for fresh entry.

MACD (18.9): Strong bullish momentum.

Price above 50 DMA (₹547) and 200 DMA (₹521): Confirmed uptrend.

Volume Surge: Indicates strong accumulation.

💰 Ideal Entry Price Zone

Accumulation Zone: ₹545–₹575

This range aligns with 50 DMA and previous breakout levels.

Avoid chasing above ₹620 unless supported by earnings upgrades.

🧭 Exit Strategy / Holding Period

If you already hold SUMICHEM

Hold for 5–7 years for long-term compounding, supported by strong ROE and low debt.

Exit partially if price crosses ₹680–₹700 and PEG remains elevated.

Hard Stop: Weekly close below ₹570 as per swing setup strategy

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Reassess if ROE drops below 15% or margins compress due to pricing pressure.

Long-Term Outlook

2025 Target: ₹680.95

2026 Target: ₹906.61

2027 Target: ₹1,207.05

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Growth Drivers: New product launches (Excalia Max, Lentigo), backward integration, export expansion

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Would you like a comparison with peers like PI Industries or Bayer CropScience to assess relative valuation and growth potential?

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