MUROMACHI CHEMICALS INC. (4885) AI Stock Analysis

• Market Cap: ¥4.75B
• Dividend Yield: 4.25%
• Average Volume (3M): 8.80K
• Price to Earnings (P/E): 14.2
• Beta (1Y): 0.72
• Revenue Growth: 7.90%
• EPS Growth: -39.51%
• Country: JP
• Employees: 205
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals
• EPS (TTM): N/A
• Shares Outstanding: 4,095,500
• 10 Day Avg. Volume: 6,960
• 30 Day Avg. Volume: 8,803
• PEG Ratio: -0.53
• Price to Book (P/B): 1.43
• Price to Sales (P/S): 0.53
• P/FCF Ratio: -30.96
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 69 Neutral
• Price Target: ¥1,478.00 ▲(78.72% Upside)
• Action: Downgraded Date: 02/18/26
• Date: Action: Downgraded 02/18/26

The score is primarily driven by mixed financial fundamentals: strong revenue growth and solid operating margins are offset by weakening cash flow (negative free cash flow) and still-elevated leverage. Technicals are supportive with a strong uptrend, but overbought indicators increase near-term risk. Valuation is a positive contributor with a moderate P/E and a solid dividend yield.

Positive Factors

Diversified business model

Muromachi's exposure across industrial, specialty chemicals and electronics materials provides durable demand diversification. Serving automotive, electronics and pharma reduces cyclicality and supports steadier revenue streams, enabling cross-market R&D leverage and long-term resilience.

Consistent revenue growth

Sustained ~14.8% revenue growth demonstrates expanding market share and product adoption. Over a 2-6 month horizon this growth underpins scale advantages, supports reinvestment in R&D and capacity, and provides a foundation for improving gross and operating leverage.

Healthy operating margins

Robust EBIT/EBITDA and a stable gross margin indicate effective cost management and pricing power in core products. Margin durability supports internal funding for innovation and capital needs, cushioning profits against moderate input cost swings over the medium term.

Negative Factors

Weak cash generation

Material deterioration in operating cash flow and negative free cash flow reduce financial flexibility. Over months this can constrain capex, R&D funding or dividends, and increase reliance on external financing, raising refinancing and liquidity risk for strategic initiatives.

Falling net profit margin

A declining net margin despite stable gross margins implies higher operating or non-operating costs. Persisting margin erosion can weaken return on capital and limit retained earnings, reducing capacity to invest in growth or absorb adverse industry developments.

Elevated leverage

Although leverage has improved, remaining relatively high raises interest and solvency risk. Elevated debt limits strategic flexibility, increases sensitivity to cash-flow volatility, and can constrain growth investments or force priority on deleveraging over expansion.

MUROMACHI CHEMICALS INC. Business Overview & Revenue Model

Company Description

Muromachi Chemicals Inc. plans, produces, and distributes pharmaceuticals and health foods in Japan. It offers active pharmaceutical ingredients and intermediate synthesis products; commissioned processing services for pharmaceuticals; and commissioned synthesis services for radioactive and stable isotope tagged compounds used in pharmaceutical and agricultural metabolic testing, as well as imports and sells active pharmaceutical ingredients. The company also provides jelly and non-alcoholic beverage products. In addition, it offers ion-exchange resins, separation membranes, and ion-exchange fibers; and solutions that meet customers' needs with water-treatment products, including filter media, equipment, and chemicals, as well as commissioned chemical processing services. Further, the company provides functional adhesives; and product contamination removal and dust removal mats, and antistatic products for use in the electronics industry, as well as engages in the commissioned manufacturing and processing of functional pastes. The company was founded in 1917 and is headquartered in Omuta, Japan.

How the Company Makes Money

MUROMACHI CHEMICALS INC. generates revenue primarily through the sale of its chemical products across multiple sectors. The company has established key revenue streams from its industrial chemicals and specialty chemicals divisions, which serve a wide array of applications. Significant partnerships with manufacturers in the automotive and electronics industries also contribute to its earnings, as these sectors require high-quality chemical materials for production. Additionally, the company invests in R&D to develop new products and improve existing ones, thus enhancing its competitive edge and expanding its market reach.

MUROMACHI CHEMICALS INC. Financial Statement Overview

Summary

Strong and consistent revenue growth with healthy EBIT/EBITDA margins, but weakened profitability (lower net margin) and notably deteriorating cash generation (operating cash flow down and free cash flow negative). Balance sheet leverage is improving yet remains relatively high, adding risk.

Income Statement

Muromachi Chemicals Inc. has shown consistent revenue growth over the years, with a notable increase from 2024 to 2025. The gross profit margin remains stable, indicating efficient cost management. However, the net profit margin has decreased, suggesting rising expenses or other financial pressures. EBIT and EBITDA margins are healthy, reflecting strong operational performance.

Balance Sheet

The company's debt-to-equity ratio has improved over time, indicating better leverage management, but it remains relatively high compared to industry standards. Return on equity has decreased, which may concern investors. The equity ratio is stable, suggesting a balanced asset structure.

Cash Flow

Operating cash flow has decreased significantly, impacting the company's ability to generate cash from operations. Free cash flow has turned negative, indicating potential liquidity issues. The free cash flow to net income ratio is concerning, suggesting challenges in converting profits into cash.

Breakdown	May 2024	May 2023	May 2022	May 2021	May 2021
Income Statement
Total Revenue	6.65B	6.37B	6.29B	5.68B	4.94B
Gross Profit	1.91B	1.82B	1.75B	1.73B	1.63B
EBITDA	540.83M	623.23M	493.14M	543.84M	351.62M
Net Income	241.28M	330.20M	256.30M	456.27M	180.71M
Balance Sheet
Total Assets	5.26B	5.06B	4.95B	4.80B	4.61B
Cash, Cash Equivalents and Short-Term Investments	1.06B	1.05B	852.61M	865.36M	1.00B
Total Debt	1.65B	1.44B	1.57B	1.69B	2.04B
Total Liabilities	2.81B	2.79B	3.03B	3.12B	3.28B
Stockholders Equity	2.45B	2.27B	1.92B	1.68B	1.33B
Cash Flow
Free Cash Flow	-112.86M	398.53M	206.91M	354.57M	431.82M
Operating Cash Flow	215.95M	637.70M	317.19M	524.90M	487.67M
Investing Cash Flow	-340.50M	-232.23M	-162.41M	-176.28M	-57.73M
Financing Cash Flow	123.20M	-209.95M	-172.39M	-483.63M	-310.51M

MUROMACHI CHEMICALS INC. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 827.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4885, the sentiment is Positive. The current price of 827 is below the 20-day moving average (MA) of 1175.70, below the 50-day MA of 1003.80, and above the 200-day MA of 823.12, indicating a bullish trend. The MACD of 84.91 indicates Positive momentum. The RSI at 70.73 is Negative, neither overbought nor oversold. The STOCH value of 52.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4885.

MUROMACHI CHEMICALS INC. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4093	79 Outperform	¥16.25B	12.89	―	3.89%	-3.00%	-29.83%
4040	77 Outperform	¥9.16B	3.04	―	1.96%	8.43%	2.99%
4885	69 Neutral	¥4.75B	14.18	―	4.25%	7.90%	-39.51%
6568	69 Neutral	¥10.48B	20.66	―	2.98%	-9.60%	-38.34%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
4960	60 Neutral	¥12.26B	93.74	―	1.06%	-9.63%	-1.71%
4080	48 Neutral	¥13.27B	-10.19	-7.76%	―	-19.70%	-159.15%