Sumitomo Chemical India (SUMICHEM) Q4 23/24 earnings summary

Executive summary

• Revenue from operations declined to ₹28,325 million in FY 2023-24 from ₹35,110 million in FY 2022-23, reflecting a challenging year for the agrochemical sector due to erratic monsoons, lower demand, high-cost inventory, and declining prices.

• Net profit after tax dropped to ₹3,697 million from ₹5,034 million year-over-year, with profit margins impacted by reduced sales and increased working capital requirements.

• Despite headwinds, the company maintained strong financial discipline, continued investments in R&D, and launched nine new products in the last 18 months.

• A special interim dividend of ₹5 per share was paid to commemorate the silver jubilee year, and a final dividend of ₹0.90 per share is proposed.

Financial highlights

• EBITDA for FY 2023-24 was ₹474.6 million, with EBITDA margin at 16.7%, down from 18.4% in the previous year.

• PAT margin decreased to 13.1% from 14.3% year-over-year.

• Return on equity fell to 15.1% from 21.1% in FY 2022-23.

• Domestic sales declined to ₹22,510 million (from ₹26,069 million), and exports to ₹5,553 million (from ₹8,664 million).

• Inventory reduced significantly, supporting cash flows.

Outlook and guidance

• The India Meteorological Department forecasts above-average monsoon for 2024, supporting a positive industry outlook.

• The company plans to ramp up volumes from two new plants and expand manufacturing at the Dahej site.

• Focus remains on new product launches, leveraging parent company’s proprietary molecules, and digital transformation to drive growth.