Sumitomo Chemical India Navigates Monsoon Mayhem with Strategic Resilience in Q2 & H1 FY26

Sumitomo Chemical India Limited, a formidable player in the Indian agrochemical space, recently unveiled its financial performance for the second quarter and first half of fiscal year 2026. While the quarter faced significant headwinds from erratic monsoon patterns, the company demonstrated remarkable resilience, maintaining profitability and advancing its strategic growth initiatives. The management, led by Mr. Chetan Shah, acknowledged the challenging climatic conditions that impacted Q2, but highlighted the underlying strength and disciplined execution that allowed for healthy growth in the first half.

For Q2 FY26, the consolidated revenue from operations stood at INR 930 crore, a slight decline from INR 988 crore in the corresponding period last year. This contraction was primarily attributed to lower volumes in the domestic market, as persistent and excessive rainfall from mid-July through September curtailed field activities and delayed spray applications in key Kharif crops. Despite this, gross margins were maintained at 43.1%, showcasing the company's cost efficiency and prudent input sourcing. Operating EBITDA for Q2 was INR 218 crore, with an EBITDA margin of 23.4%. Profit after tax (PAT) for the quarter was INR 178 crore, reflecting a PAT margin of 19.1%. The lower operating leverage due to weather-related volume impact led to a moderation in profitability, but the company successfully maintained healthy margins through stringent cost control and disciplined channel management.

Looking at the consolidated performance for H1 FY26, the picture is more robust. Revenue from operations grew by 9% year-on-year, reaching INR 1,987 crore compared to INR 1,827 crore in H1 FY25. Gross margin for H1 FY26 was 40.4%, broadly in line with the previous year. Operating EBITDA for H1 FY26 stood at INR 437 crore, an 8% jump from INR 406 crore in H1 FY25, with an EBITDA margin of 22.0%. Profit after tax for the first half amounted to INR 356 crore, an 11% increase from INR 319 crore in the previous year. Domestic agrochemical revenue contributed approximately 85% of the overall H1 revenue, growing 11% year-on-year, while export revenue degrew by 4%, mainly due to a decline in sales to South America.

Strategic Pillars for Future Growth

Sumitomo Chemical India is firmly focused on executing its strategy around five key pillars to deliver long-term sustainable growth. These include strengthening its domestic franchise and farmer engagements, scaling up recently launched differentiated products, enhancing export competitiveness and global footprint, advancing manufacturing and backward integration initiatives, and sustaining financial discipline.

The company's 'Every Day Farmers Day' initiative has emerged as a key differentiator, deepening farmer connect through structural engagement programs and digital interventions. This initiative facilitates direct communication with farmers, demonstrates product efficacies, and enhances brand recall. The company plans to expand its coverage across additional districts, focusing more on the Rabi crop to consolidate its leadership in the domestic market.

Innovation remains at the core of Sumitomo Chemical India's growth strategy. New products like the rice herbicide 'Lentigo' and the patented fungicide 'Excalia Max' have been well-received, surpassing initial expectations. The company is intensifying its focus on expanding its global presence, broadening its footprint across Africa, Latin America, and Southeast Asia, while consolidating relationships in the US and Europe. India is increasingly being positioned as a critical manufacturing and export base for the global organization, backed by the parent company's global supply chain and registration network.

Manufacturing Expansion and Financial Prudence

Manufacturing excellence and backward integration are crucial to the company's long-term strategy. Sumitomo Chemical India has commenced backward integration for selected molecules at its Tarapur facility and is making significant progress in project planning and regulatory approvals for a greenfield expansion at Dahej. These facilities are designed to produce multiple Sumitomo-origin molecules and intermediates, diversifying the parent company's global manufacturing footprint and enhancing SCIL's cost competitiveness. The company has approved two CAPEX projects: a second plant at Bhavnagar for a key SCC innovated product for global requirements (approximately INR 55 crore) and the production of a newly launched SCC innovated molecule at Tarapur (approximately INR 10 crore), both targeted for completion by Q4 FY27.

Financially, the company's working capital management remained robust, with net working capital days improving by 7 days year-on-year to 55 days, driven by better receivable collections and stable inventory management. Cash and cash equivalents stood at INR 2,089 crore as of September 30, 2025, providing strong liquidity and balance sheet flexibility. The management emphasized its philosophy of responsible growth, prioritizing liquidity management, cash generation, and prudent working capital deployment.

Outlook and Takeaways

Looking ahead, Sumitomo Chemical India enters the second half of FY26 with measured optimism. Healthy reservoir levels, adequate soil moisture, and a normal withdrawal of the monsoon augur well for the upcoming Rabi season, with field conditions improving significantly since late September. The company expects improved rural sentiment and a steady recovery in agri-input demand in H2 FY26. The unwavering focus on portfolio differentiation, operational excellence, farmer engagement, and disciplined execution positions the company well to deliver sustainable value for all stakeholders.

The company's strategic directions are well-aligned with the evolving needs of Indian agriculture, a sector transforming through technology, sustainability, and innovation. Sumitomo Chemical India remains committed to strengthening its domestic franchise, deepening the innovation pipeline, expanding manufacturing and integration, and maintaining balance sheet strength, all of which are expected to enable consistent, sustainable growth and long-term value creation.