💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for H1 FY26 reached INR 1,986.6 Cr, a 9% YoY increase from INR 1,827.2 Cr. The domestic segment grew 11% YoY, while the export segment declined 4% YoY. Product-wise revenue contribution for H1 FY26 was led by Insecticides at 39%, followed by Herbicides at 26%, Plant Growth Regulators (PGR) at 9%, and Fungicides at 9%.

Geographic Revenue Split

The domestic market is the primary driver, contributing 85% of total revenue in H1 FY26. Exports account for the remaining 15%. Within exports, sales to South America experienced a significant 33% YoY decline during H1 FY26, impacting the overall export growth trajectory.

Profitability Margins

Gross margin for H1 FY26 stood at 40.4%, a slight compression of 47 bps from 40.9% in H1 FY25. Net Profit Margin improved to 17.9% in H1 FY26 from 17.5% in H1 FY25, driven by a 11% growth in Net Profit to INR 355.9 Cr. Operating margins are expected to sustain at 19-20% over the medium term due to high operating leverage.

EBITDA Margin

EBITDA margin for H1 FY26 was 22.0%, down 23 bps from 22.2% in H1 FY25. For Q2 FY26, the EBITDA margin was 23.4%, a decline of 137 bps from 24.8% in Q2 FY25, primarily due to a 6% decline in quarterly revenue to INR 929.8 Cr and higher employee expenses which rose to INR 69.5 Cr.

Capital Expenditure

The company completed an initial capex of INR 120 Cr for five products with a revenue potential of INR 200-250 Cr. A new capex plan of INR 55 Cr has been announced. Annual capex is guided between INR 130 Cr and INR 230 Cr to support the scale-up of recently launched products and manufacturing of proprietary molecules from the parent company.

Credit Rating & Borrowing

The company maintains a debt-free status as of September 30, 2025. Credit ratings highlight a strong financial risk profile with a Total Outside Liabilities to Tangible Networth (TOLTNW) ratio below 0.42 times. Interest costs remain minimal at INR 3.9 Cr for H1 FY26, representing only 0.2% of revenue.

⚙️ Operational Drivers

Raw Materials

The company utilizes chemical intermediates for insecticides, weedicides, and fungicides, with input prices declining in 9M FY25, leading to a 493 bps increase in gross margins to 41.2% during that period.

Capacity Expansion

Current expansion includes a dedicated INR 120 Cr investment for 5 new products and a subsequent INR 55 Cr capex plan. The company is leveraging its parent's chemistry skills to manufacture proprietary products, aiming for a revenue potential of INR 200-250 Cr from the initial 5-product block.

Raw Material Costs

Cost of Goods Sold (COGS) for H1 FY26 was INR 1,183.7 Cr, representing 59.6% of revenue. The company employs rigorous cost optimization in procurement and benefits from declining global input prices to maintain gross margins above 40%.

Manufacturing Efficiency

Operating leverage benefits are expected to sustain margins at 19-20%. Efficiency is driven by tight control on overheads and high fixed cost absorption as export and domestic volumes recover.

Logistics & Distribution

The company focuses on receivable management, with collections in H1 FY26 reaching INR 2,277 Cr, up 14% from INR 1,999 Cr in H1 FY25, ensuring disciplined cash flow despite seasonal challenges.

📈 Strategic Growth

Expected Growth Rate

19-20%

Growth Strategy

Growth will be achieved through the 'SCI 2.0' initiative, focusing on 'Innovate, Nurture, Grow.' This involves launching 5 new products from a INR 120 Cr capex, expanding into specialty high-margin molecules, and leveraging the parent company Sumitomo Chemical Company Ltd's (SCCL) proprietary chemistry and global distribution network.

Products & Services

The company sells crop protection formulations including insecticides, weedicides, fungicides, fumigants, rodenticides, plant growth nutrition products, biorationals, and plant growth regulators.

Brand Portfolio

Sumitomo Chemical India Limited (SCIL).

New Products/Services

Five new products launched via the INR 120 Cr capex are expected to contribute INR 200-250 Cr in annual revenue, representing approximately 6-8% of total annual turnover.

Market Expansion

The company is targeting growth in the domestic market (which grew 11% in H1 FY26) and reinstating export demand by leveraging the brand strength of its Japanese parent, SCCL.

Market Share & Ranking

The company holds a leadership position across several product categories in the domestic crop protection market, though specific market share percentages were not disclosed.

Strategic Alliances

SCIL is a subsidiary of Sumitomo Chemical Company Ltd (SCCL), Japan, providing it exclusive access to proprietary molecules and global R&D capabilities.

🌍 External Factors

Industry Trends

The industry is shifting toward specialty combination products and biorationals. SCIL is positioned to benefit from this trend by leveraging its parent's proprietary chemistry, aiming to maintain operating margins above 20% as demand for crop protection reinstates.

Competitive Landscape

SCIL competes with other domestic and multinational agrochemical players but maintains discipline in order processing and pricing to prioritize profitability over aggressive top-line growth.

Competitive Moat

The company's moat is built on its relationship with SCCL Japan, providing access to proprietary products and a diversified portfolio (insecticides, weedicides, fungicides, PGRs). This advantage is sustainable due to the high entry barriers in specialty chemical manufacturing and patent protections.

Macro Economic Sensitivity

The business is highly sensitive to agricultural cycles; uneven rainfall and low pest pressure can lead to volume declines, as seen in the temporary setbacks during fiscal 2024.

Consumer Behavior

Farmers are increasingly adopting plant growth regulators and biorationals, segments where SCIL is expanding its presence to drive higher margins.

Geopolitical Risks

Macro-economic factors in South America led to a 33% decline in regional sales, highlighting the risk of geographic concentration in specific export markets.

⚖️ Regulatory & Governance

Industry Regulations

The company must comply with cost audit requirements; Messrs GMVP & Associates LLP were appointed as Cost Accountants for FY 2025-26 with a remuneration of INR 0.055 Cr.

Taxation Policy Impact

The effective tax rate for H1 FY26 was approximately 25.6%, with tax expenses of INR 122.6 Cr on a PBT of INR 478.4 Cr.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the seasonality of the agrochemical business and weather-dependent demand, which can cause quarterly revenue fluctuations (e.g., Q2 FY26 revenue fell 6% YoY).

Geographic Concentration Risk

85% of revenue is concentrated in the Indian domestic market, making the company highly dependent on the Indian monsoon and local agricultural economy.

Third Party Dependencies

The company is dependent on its parent, SCCL, for proprietary molecules and technical expertise, which is a core component of its 'SCI 2.0' growth strategy.

Technology Obsolescence Risk

The company mitigates technology risks by focusing on 'Innovate Nurture Grow' and introducing new combination products to replace older generic formulations.

Credit & Counterparty Risk

Receivables quality is high, with trade receivable days at 91 days. Expected credit loss allowance on trade receivables was INR 12.04 Cr for H1 FY26, representing a small fraction of the INR 783.4 Cr receivable base.