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Sudarshan Chemical Industries Ltd
NSE: SUDARSCHEM BSE: 506655 INE659A01023 Commodities Energy 🔎 Screen
Microcap 250
₹7,141 Cr
Market Cap
2,119.0
P/E
PEG
6.0%
ROCE
3.1%
ROE
0.72
D/E
6.0%
OPM
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📈 Price History
Ratio Health
Excellent
Good
Average
Poor
By Category
Shareholding
About

Sudarshan Chemical Industries manufactures and sells a wide range of Organic and Inorganic Pigments, Effect Pigments. The Group also manufactures Pollution Control Equipment, Size Reduction Equipment and Grinding Equipments for industrial applications.(Source : 202003 Annual Report Page No:203)

✓ Strengths 3
  • Company is expected to give good quarter
  • Company has been maintaining a healthy dividend payout of 82.8%
  • Debtor days have improved from 93.5 to 62.6 days.
! Concerns 3
  • Promoter holding is low: 8.19%
  • Company has a low return on equity of 2.96% over last 3 years.
  • Promoter holding has decreased over last 3 years: -27.6%
Key Ratios Snapshot
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📈 Growth Pattern
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3-Statement Financial Model
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Mixed quarter — top-line beat on demand recovery but underlying business EBITDA margin remains weak at 6.1%, masking the true profitability picture. quarter Investor Presentation One-Pager? Mar 2026
Revenue
₹2,790 Cr
+6.6% YoY, +36% QoQ (One Sudarshan consolidated)
EBITDA Margin
14.4%
Reported Adjusted EBITDA margin; up ~1.7pp YoY but includes ₹82 Cr inventory overhead release
PAT
₹105 Cr
Adjusted PBT excl. RPS gain; +239% YoY from negative base
Net Debt
₹755 Cr
Reduced from ₹934 Cr in Dec'25; net debt-to-equity 0.3x
What Went Right
  • Revenue recovery: consolidated ₹2,790 Cr, up 6.6% YoY and 36% QoQ, driven by destocking easing in Global Key Accounts and demand pickup in Europe, India and North America.
  • Acquired group revenue run rate improved to €61M in Q4 (vs €47M in Q3), a ~30% sequential gain.
  • RIECO revenue grew 25.9% YoY to ₹102 Cr and EBITDA turned positive at ₹10 Cr (vs -₹17 Cr in Q4 FY25), showing restructuring benefits.
  • Net debt reduced sharply to ₹755 Cr from ₹934 Cr in Dec'25, aided by inventory reduction and improved cash conversion.
What to Watch
  • Underlying business EBITDA (excluding inventory overhead release) was only ₹118 Cr, implying a margin of just 6.1% — significantly lower than the reported 14.4% and highlighting persistent operational challenges in the acquired group.
  • Legacy Sudarshan pigment sales grew only 0.4% for the full year, essentially stagnant despite market recovery.
  • Acquired group full-year business EBITDA was only €19M, far below the guided path to €35M in FY27 or the long-term €90-100M target.
  • Adjusted PBT of ₹105 Cr, while improved, remains modest for a combined entity of this scale, and the business remains sensitive to one-off gains.
Management Guidance
  • FY27 projection for Acquired Group: Sales ~ €700M, EBITDA ~ €35M.
  • Medium-term target: Acquired Group EBITDA of €90-100M over 3-4 years, driven by synergies, value capture and sales growth.
Investor Lens
The investment thesis remains intact but hinges on execution. The Q4 revenue beat and debt reduction are positive; however, the wide gap between reported EBITDA (14.4%) and business EBITDA (6.1%) signals that integration and margin improvement are still work-in-progress. The acquired group's current €19M EBITDA is only 2.7% of the guided €700M sales run rate, implying massive ramp-up needed. Key for next quarter: monitor organic business EBITDA progression (ex-inventory releases), working capital trends (NWC/sales at 25.9% for FY26), and tangible evidence of synergy realization from the GCC and SAP integration. Without steady improvement in underlying profitability, the premium valuation (P/E ~50x on adjusted PAT) remains vulnerable.
From investor presentation · AI-generated analysis · Not investment advice
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📊 MIXED Revenue doubles YoY but margins slip; PAT at Rs 82 Cr
Revenue
Revenue surged 106.8% YoY to ₹2,790 Cr, driven by strong volume growth. Sequentially, revenue rose 32.7% compared to Dec 2025 quarter.
Profitability
Net profit turned positive at ₹82 Cr vs loss of ₹? in Mar 2025, with EPS of ₹10.01 against negative EPS previously. However, high tax rate of 51% and interest costs of ₹41 Cr impacted bottom line.
Margins
Operating profit margin dipped to 8% from 9% YoY, despite revenue scale-up. Higher input costs likely squeezed margins, though absolute operating profit grew 78.7% to ₹227 Cr.
Cash Flow
No data available for cash flow from operations. Comparison with PAT cannot be made.
Balance Sheet
Total borrowings stood at ₹2,473 Cr against reserves of ₹3,434 Cr, resulting in a debt-to-equity of 0.72. ROCE and ROE are low at 6.03% and 3.07%, indicating inefficient capital utilisation.
Key Risks
High P/E of 2119 suggests overvaluation relative to earnings. Margins are declining despite revenue growth, and an effective tax rate of 51% erodes profitability. Interest coverage may be a concern with high debt.
Outlook
Revenue growth momentum is strong, but margin recovery is crucial for sustainable profitability. Managing debt and improving return ratios will be key near-term focus areas.
Generated by AI · Mar 2026 results · Not investment advice
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Revenue by Segment

Segment Q2FY26 Q3FY26 Trend
Others
61
EBIT 6
52
EBIT -2
Pigment
2,327
EBIT 126
2,052
EBIT 40
Total 2,388 2,104

Source: NSE Integrated Filing XBRL (Reg. 33 Ind AS). Values in ₹ Crore.

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Investment Risk:
Investing in securities, including equities and mutual funds, involves inherent risks, including the potential loss of principal. All investments are subject to market fluctuations, regulatory changes, and other risks that may affect their value. Past performance is not indicative of future results. This report is provided for informational and educational purposes only and should not be construed as investment advice under any circumstances.

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The author and/or analyst may currently hold or have previously held positions in the securities or financial instruments discussed in this report. Any such positions, if material, are disclosed to the best of the author's knowledge and are not intended to influence the objectivity or independence of the analysis. This research is produced independently and is not sponsored, endorsed, or commissioned by any company, institution, or third party.

Information Sources:
The analysis and opinions expressed herein are based on publicly available information, including but not limited to company filings with the BSE/NSE, annual reports, management commentary, investor presentations, data from the Reserve Bank of India (RBI), SEBI, industry publications, and other reliable financial data sources. Information is believed to be accurate as of the date of publication but may be subject to change without notice. Readers are encouraged to independently verify all information before acting upon it.

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