Sumitomo Chemical soars 11%, hits new high on stable revenue growth outlook


Shares of Sumitomo Chemical India soared 11 per cent and hit a 52-week high of Rs 437.85 on the BSE in intra-day business on Tuesday on the back of heavy volumes on stable revenue growth outlook. The agrochemicals company’s inventory surpassed its preceding high of Rs 403.05, touched on June 23, 2021.

Previously three trading days, it has rallied 16 per cent after the company, in its financial year 2020-21 (FY21) annual outline, said that with new product launches deliberate for the year and for the years yet to come, steady revenue growth is expected to continue in the coming years.

At 11:07 am, the inventory used to be trading 9 per cent higher at Rs 431, as in comparison to 0.16 per cent rise in the S&P BSE Sensex. The trading volumes on the counter jumped over four-fold with a combined 5.28 million shares changing hands on the NSE and BSE.

Because of outbreak of the second one wave of Covid-19, in the financial year 2021-22, the industry is likely to witness situation very similar to the first-half of previous financial year like lockdown, restrictions on people movements and economic activities, logistics issues, increase in cost of uncooked materials, transportation and inputs, a minimum of for a couple of months.

In 2020-21, despite all of the odds, the agrochemicals sector grew and agricultural activities remained in large part unaffected. The Company’s commerce and products fall under ‘fundamental commodities’ hence it expects to produce and deliver services to the market and the farmers without fabric interruption. Final year, the industry used to be in a position to pass on the cost increases to the market, the company said in the FY21 annual outline.

In spite of the pandemic, which is likely to have an effect on the normal life for a minimum of few months, domestic demand for agrochemicals is expected to remain elevated with beneficial agronomical conditions in Agriculture sector like normal monsoon forecast by Indian Meteorological Branch, good farm-production in the preceding year, and good output prices which will translate in to increase in area under-cultivation for crops like cotton, soybean, paddy and groundnut, which are major agrochemicals consuming crops.

All the way through the year, the Central Government has issued a notification expressing its intention that Glyphosate, a weedicide and crucial product for the Company, will be allowed for use only through ‘pest keep watch over operators’. The Company, other industry players and the industry associations have filed appeals before the appellate authority against the proposal as the proposal isn’t feasible and not implementable owing to ground realities. Hearing in the matter is pending. The proposal, whether implemented, will have affect only on domestic use of Glyphosate. It is going to not affect exports, the company said.

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