Sumitomo Chemicals -
Q4 and FY 26 results and concall highlights -
Q4 outcomes -
Revenues - 684 cr, up 1 pc
Gross margins @ 42.3 vs 40 pc
EBITDA - 134 cr, up 12 pc ( margins @ 19.6 vs 17.6 pc )
PAT - 112 vs 100 cr, up 12 pc
FY 26 outcomes -
Revenues - 3238 cr, up 3 pc
Gross margins @ 42 vs 41 pc
EBITDA - 671 cr, up 6 pc ( margins @ 20.7 vs 20.1 pc )
PAT - 543 cr, up 7 pc
Exports De-Grew 7 pc in Q4 and by 1 pc in FY 26. African business however did exceptionally well, going by 26 pc and 30 pc in Q4 and FY 26 respectively
Herbicides grew strongly in Q4 and FY 26, growing by 87 pc and 19 pc respectively. Metal Phosides grew by 16 pc and 11 pc in Q4 and FY 26
Product-led execution remained a key focus area during FY26. Newly launched products including Lentigo ( next generation Paddy herbicide ), Excalia Max ( next generation Fungicide for Paddy crop ), Powerpull ( broad spectrum insecticide ), Advika ( broad spectrum insecticide ), Envoy ( broad spectrum insecticide ) and Oslava ( received encouraging market response. Registration of Topgrain ( BioStimulant ) was also completed during the year - strengthening the future product pipeline
FY 26 domestic:export sales @ 79:21
Breakup of Branded:Bulk sales in domestic mkt @ 81:77
Breakup of Branded:Bulk sales in export mkt @ 40:60
Breakup of company level patented:generic mix of sales @ 29:71
Company makes 14 AIs in house, has 5 manufacturing facilities ( 3 AIs 2 formulations ), has a field force @ 1500 employees
Key export destinations include - LatAm, Japan, Africa, Asia ( ex-India )
Notes from previous concalls -
Company continues to work towards strengthening Sumitomo Japan’s supply chains and concentrating them in India for future exports to RoW with India as a key manufacturing base
Company is in the process of registering its formulations in various export mkts. Registration of these take time ( 2-3 yrs, depending on country to country ). As these registrations keep maturing, company’s share of formulations in their export business shall improve ( this segment has better margins vs AIs ). At present, most of company’s export sales are AIs and share of Formulations in export sales is far lower
Have approved a Greenfield capex @ Dahej - to expand company's manufacturing footprint for local and global supplies. Company is evaluating manufacturing of 7 new products ( AIs ) @ Dahej Greenfield facility. Company has submitted feasibility reports iro these products to its parent in Japan. If all are approved to be made in India ( @ Dahej ), company may incur a capex of aprox 500- 600 cr over next 3 odd years @ Dahej
Company’s semiconductor chemicals shall be used in fabrication. Company is monitoring the progress of corporates ( specially TATAs ) setting up fabrication plants in India. Once that happens, company shall begin their Semi Conductor chemicals business
Notes from Q4 concall -
FY 26 was one of the most challenging years in Indian Agrochemicals industry due persistent and prolonged rains well into Oct 25. PGRs, Biologics solutions were severely impacted. Exports were hit in Mar 26 due war in Iran. Consumption of insecticides was also affected adversely due unseasonal rains
Company's share of revenues from Biologics @ aprox 10 pc vs industry avg of sub 5 pc. Should see accelerated growth in Biologics wef FY 27
Lentigo and Excallia Max are both patented molecules ( launched LY ) - both did exceedingly well LY
Products launched in last 3 yrs now contribute to 8 pc of their revenues
Will introduce another 2-3 patented products in India over next 1-2 yrs
Risks for FY 27 - constrained availability of Fertilizers due Iran war, El-Nino induced below normal rainfall, escalating RM prices
At present, aprox 56 pc of Indian net sown area is covered by assured irrigation facilities - making Indian agriculture relatively insulated by vagaries of weather
Have been passing on the RM prices in a calibrated manner. Demand continues to hold up in Q1 FY 27
Cash on books @ 2133 cr
India has been upgraded to same level as North America, Japan, LatAm - for testing and early stage introduction of new / patented molecules developed by company's parent ( SCC Japan ). Have received 2 molecules for local trials. Its a very positive development
Discussing a new Royalty arrangement with their parent ( previously were not paying any royalty ) - in return for flexibility to SCIL to procure RMs/Technicals locally. At present, such arrangement will be limited to only 2-3 products
Insecticides share of company's revenues is the highest @ 41 pc
Companys exports and RM imports are roughly equally matched @ aprox $ 70-80 million each - insulating them from currency movements
All the meetings with GoI wrt manufacturing and commercialisation of speciality chemicals for Semi Conductor manufacturings are being jointly attended by SCIL and SCC Japan. Should hear some good news in future
Custom synthesis revenues are roughly around 120 to 150 cr - company does this for their parent. Should see good growth in this segment in medium term
Committed to sustain their margins in FY 27 - despite the challenges in RM prices. Have already taken 3 price hikes post the breakout of war in the Gulf
Have deliberately over produced in Q4 - to insulate against supply shocks
Expect to launch TopGrain ( BioStimulant ) 1 more speciality product in India in FY 27
Phase 1 of Dahej capex should cost them aprox 150 cr - to be completed over next 18 odd months. Expect a series of more announcements going forward
Company reduced its animal nutrition trading and distribution business in FY 26. Adjusted for that, their core agrochemicals business grew by 6 pc in FY 27
PGRs were affected in FY 26 due excessive rains that led to sharp decline in Grapes output. In addition, there were additional approvals as mandated by GoI for sale of PGRs in India. Company has completed most of them. FY 27 should be a good year for their PGR business
Similarly, fungicide and insecticide sales were badly affected due excessive rains
The cash on books shall be used for organic capex in both agrochemicals and semiconductor chemicals related expansion projects
In general, farmers are more concerned about electricity, fertiliser prices vs agrochemicals ( as agrochemicals r generally used at later stages when the farmer has a good visibility on the crop and their cost vs fertilisers r also lower )
Disc: holding, biased, not SEBI registered, not a buy/sell recommendation, posted only for educational purposes