Q3FY21 Result Update - Sudarshan Chemical - ICICI Direct

Sudarshan Chemical's Q3FY21 results were higher than I-direct estimates on all fronts. Revenues grew 19.6% YoY to Rs. 506.4 crore (I-direct estimate: Rs. 464.3 crore) led by 22.1% growth in pigment segment to Rs. 477.1 crore amid revival in domestic demand and continuous traction in export markets. EBITDA margins improved 138 bps YoY to 15.7% (I-direct estimate: 15.7%) mainly due to lower other expenditure and partially offset by increase in raw material prices. PAT grew 38.4% YoY to Rs. 39.2 crore (I-direct estimate: Rs. 34.5 crore), in line with operational performance.

Valuation & Outlook

The company's operations and demand from end users are reverting back to normal as the economy opens up. The company's H2 is also likely to benefit amid some pent-up demand. Owing to strong demand, the company is trying to expedite its growth capex plans of Rs. 585 crore (which have been bit delayed amid Covid), which gives strong visibility and management commitment towards future growth. Sudarshan's strong track record, with favourable macro factors and strong domestic demand are key catalysts for it. Margins are also likely to improve due to backward integration and change in product mix towards margin accretive products. We maintain BUY recommendation with a target price of Rs. 605 (24x FY23E EPS of Rs. 25.2) vs. earlier target price of Rs. 550.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_SudarshanChem_Q3FY21.pdf

Shares of SUDARSHAN CHEMICAL INDUSTRIES LTD. was last trading in BSE at Rs.508 as compared to the previous close of Rs. 491.15. The total number of shares traded during the day was 22797 in over 1389 trades.

The stock hit an intraday high of Rs. 523.45 and intraday low of 503.3. The net turnover during the day was Rs. 11707250.

Source : Equity Bulls

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