This stock is fundamentally strong & technically sound; read to know why!

Sumitomo Chemical India Ltd (SCIL) manufactures & imports as well as markets products for crop protection, grain fumigation, rodent control, biopesticides, environmental health, professional pest control, and feed additives for use in India. SCIL has also marked its presence in Africa and several other geographies of the world.  

The stock skyrocketed in today’s session as it jumped over 12 per cent and recorded a fresh all-time high level. The volume recorded was above its 20-day average. The 20-day average volume stands at 11.48 lakh whereas, today’s session volume has already crossed 90 lakh even though we are still halfway through the session. 

Technically, the stock has witnessed a breakout of stage 2B cup pattern, which has a length of 21-week and a depth of nearly 21 per cent.   

The company reported stunning revenue growth of 19.6 per cent YoY to Rs 534 crore, which was significantly above estimates. The EBITDA margin expanded firmly by 407 bps YoY to 13.4 per cent.   

The game-changing trigger for the stock is that the company has received approval to supply five chemical molecules to parent SCC between CY22 and CY23. One out of the five molecules with 350 tonnes annual capacity is likely to be launched by Q1 of FY2022 while the remaining four products would be launched by the end of 2022 or early 2023. Volume-wise, they would be producing 350 tonnes of one of the proprietary products that would meet only one-third of their requirement of SCC Japan; thereby, giving them ample opportunities to double the capacity in the next phase.