- 31 Oct 2022
- ICICIdirect Research
SUMITOMO CHEMICAL'S Q2FY23 PERFORMANCE IN LINE WITH ESTIMATES
SUMICHEM - 527 Change: -0.55 (-0.10 %)News:
Sumitomo Chemical reported topline growth of 23.2% YoY to Rs 1121.7 crore against our expectations of Rs 1186.6 crore. The segmental details are still awaited but we expect both domestic and exports should have led higher topline growth for the quarter. Gross margins declined by 110 bps YoY while sequentially rose 280 bps to 37.9%. OPM for the quarter marginally rose 120 bps YoY and 580 bps to 24.8% owing to decline in other expenses (-200 bps YoY), which led EBITDA to grow at 30% YoY to Rs 278 crore against our estimates of Rs 270.9 crore. Bottomline grew 31% YoY to Rs201.5 crore against I-sirect estimate of Rs196.6 crore. Other income rose 34% YoY to Rs 10.5 crore while depreciation increased 39% YoY to Rs 15.4 crore. Tax rate came in at 26% vs. 23% in the previous quarter
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The numbers were in line with ours and consensus estimates despite erratic rainfall pattern in Q2. Growth was largely led by insecticides, which grew 13.8% YoY to Rs 479.6 crore and by herbicides, which grew 103.4% YoY to Rs 253.6 crore. Geography wise India and Japan market performed well. India market grew 21.1% YoY while Japan grew 5.1% YoY. In Domestic, revenue from bulk business and branded business grew 15.9% and 70% YoY, respectively. In export, revenue from bulk and branded business grew 33% and 34% YoY, respectively. Considering order issued by Central Government in its official gazette regarding restrictions in use of glyphosate, we estimate 10-15% potential impact on the revenues, for which we await management clarification
Impact:
Positive.