Sudarshan Chemical - Rising Opportunity From Industry Shake Up; Fairly Valued: ICICI Securities

ICICI Securities Report

Sudarshan Chemical Industries Ltd.’s Q4 FY24 print showed strong margin recovery led by volume growth (double digit YoY) in pigments business, and good show in RIECO.

Sudarshan Chemical has shared optimistic outlook for pigment business led by the ongoing consolidation in the industry with recent event of largest player applying for bankruptcy. The company has overlapping products, right go-to-market strategy and capacity to capitalise on the opportunity.

However, it is cautious on guidance which remains unchanged, and gradual margin improvement. We raise our FY25-26E earnings per share by 14-18% and target price to Rs 780 (from Rs 620) as we also increase our P/E multiple to 20 times (from 18 times).

We downgrade the stock to Hold (from Buy) on the recent run-up already factors in the optimism.

Risks

Downside risks: Major softness in demand, and slower margin recovery. Upside risks: Acceleration in revenue from new products, and faster-than-expected margin improvement.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.