MUROMACHI CHEMICALS INC. (4885) AI Stock Analysis

• Market Cap: ¥3.78B
• Dividend Yield: 4.25%
• Average Volume (3M): 8.80K
• Price to Earnings (P/E): 4.0
• Beta (1Y): 0.81
• Revenue Growth: 7.90%
• EPS Growth: -39.51%
• Country: JP
• Employees: 205
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals
• EPS (TTM): 46.50
• 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: ¥1,123.00 ▲(35.79% 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

Revenue Growth

Consistent double-digit revenue growth (reported ~14.8%) signals expanding end-market penetration and sustained product demand. Durable top-line momentum supports fixed-cost absorption, funds reinvestment and R&D, and creates a stable base to maintain margins and fund strategic initiatives across multiple quarters.

Operational Margins

Stable gross profit and healthy EBIT/EBITDA margins indicate efficient cost management and operational leverage. Robust operating margins provide enduring protection against input cost volatility, support cash generation when operations normalize, and enable the company to sustain reinvestment, dividends, and competitive positioning over the medium term.

Leverage Improvement

An improving debt-to-equity trend shows management focus on deleveraging and balance sheet repair. Continued reduction in leverage enhances credit optionality, lowers interest burden risk, and increases capacity for strategic investment or M&A, improving financial resilience over coming quarters if the trend persists.

Negative Factors

Weak Cash Generation

Significant decline in operating cash flow and negative free cash flow point to a structural cash-conversion issue. Persistent negative FCF can force reliance on external financing, constrain capital expenditures and dividend coverage, and increase vulnerability to interest-rate rises or liquidity stress over the next several quarters.

Declining Net Margin

A falling net profit margin while gross margins remain stable suggests rising SG&A, financing costs, or non-operating expenses. If this trend continues, it will erode retained earnings and return on equity, reducing the company's ability to self-fund growth and making long-term profitability more sensitive to revenue swings.

Elevated Leverage Remains

Despite recent improvement, leverage remains elevated relative to peers and history. Sustained high debt levels limit financial flexibility, raise refinancing and covenant risk, and can amplify profit volatility in downturns, constraining the company's ability to invest aggressively without increasing financial risk.

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

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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	1.72B	1.71B	1.63B
EBITDA	593.94M	558.02M	493.96M	542.51M	493.49M
Net Income	241.28M	330.20M	256.30M	456.27M	180.71M
Balance Sheet
Total Assets	5.32B	5.10B	4.96B	4.80B	4.62B
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	2.87B	2.83B	3.04B	3.12B	3.29B
Stockholders Equity	2.45B	2.27B	1.92B	1.68B	1.33B
Cash Flow
Free Cash Flow	-112.85M	412.21M	257.42M	378.80M	438.63M
Operating Cash Flow	215.96M	637.70M	317.19M	524.90M	487.67M
Investing Cash Flow	-370.50M	-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: Neutral
• Last Price: 827.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4885, the sentiment is Neutral. The current price of 827 is below the 20-day moving average (MA) of 1169.35, below the 50-day MA of 1087.36, and below the 200-day MA of 841.35, indicating a neutral trend. The MACD of -10.42 indicates Positive momentum. The RSI at 39.99 is Neutral, neither overbought nor oversold. The STOCH value of 26.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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	¥15.97B	8.02	―	3.89%	-3.00%	-29.83%
4040	77 Outperform	¥7.57B	0.81	―	1.96%	8.43%	2.99%
4885	69 Neutral	¥3.78B	3.95	―	4.25%	7.90%	-39.51%
6568	69 Neutral	¥9.18B	20.79	―	2.98%	-9.60%	-38.34%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
4960	60 Neutral	¥11.21B	15.26	―	1.06%	-9.63%	-1.71%
4080	48 Neutral	¥13.27B	13.41	-7.76%	―	-19.70%	-159.15%