Sumitomo Chemicals - Q2FY21 First Cut - ICICI Direct

(CMP: Rs. 283; MCap: Rs. 14176 crore)

Numbers are above than estimates primarily due to better than estimates growth from crop protection segment, OPM improved on the back of higher gross margins.

Q2FY21 Earnings Summary

- Sumitomo chemical reported topline growth of 8.7% YoY to Rs. 902 crore against our expectations of Rs. 875 crore. The topline performance was led by higher growth from crop protection segment, which stood at Rs. 868 crore (+ 9% YoY), while the revenues from other segment fell by 4.8% YoY to Rs. 33.8 crore

- Better gross margins (+493bps YoY) translated into an expansion in the operational performance by 501bps YoY to 24.3%, leading to EBITDA growth of 37% YoY to Rs. 218.9 crore against our estimates of Rs. 185 crore. OPM from crop protection segment inched up to 25% (+549bps YoY), while the same from other segment contracted by 748bps YoY to 6%

- Higher taxes (26% v/s 15% in Q2FY20) impacted bottom-line growth, which was up by 20% YoY to Rs. 157.8 crore

- The company generated FCF to the tune of Rs. 260 crore as on H1FY21 against Rs. 82 crore last year. The cash & investment as on date stood at Rs. 680 crore (~ 4.8% of MCAP) as against Rs. 180 crore as on Mar'20

We would be coming out with a detailed report soon.

Source : Equity Bulls

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