Sudarshan Chemical - Q4FY21 First Cut - ICICI Direct

(CMP - Rs. 653, MCap - Rs. 4521 crore)

Sudarshan's Q4FY21 results were higher than I-direct estimates on revenues and net profit front, while, margins were lower mainly due to lower-than-expected gross margins.

Q4FY21 earnings summary

- Revenues grew 28.4% YoY to Rs. 576.5 crore (I-direct estimate: Rs. 529.9 crore) led by 32.5% growth in pigment segment to Rs. 532.6 crore (I-direct estimate: Rs. 496.4 crore) amid likely strong end user demand

- EBITDA margins improved 315 bps YoY to 15.2% (I-direct estimate: 16.7%) mainly due to operational leverage being partially offset by lower gross margins (42% against 44.1% in Q4FY20). Subsequently, EBITDA grew 62% YoY to Rs. 87.5 crore, almost in-line with I-direct estimates of Rs. 88.6 crore

- Net profit grew 95.6% YoY to Rs. 53.4 crore (I-direct estimate: Rs. 46.4 crore) amid strong operational performance, lower depreciation and higher other income

The company's operations and demand from end users are reverting to normal as the economy opens up. Despite a challenging year, Sudarshan has reiterated its growth capex plan of Rs. 585 crore (though delayed amid Covid), which shows its strong visibility and commitment towards future growth. Its 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, change in product mix towards margin accretive products.

We will come out with an update post discussion with management.

Shares of SUDARSHAN CHEMICAL INDUSTRIES LTD. was last trading in BSE at Rs.670.7 as compared to the previous close of Rs. 653.1. The total number of shares traded during the day was 50770 in over 2943 trades.

The stock hit an intraday high of Rs. 691.65 and intraday low of 655.6. The net turnover during the day was Rs. 34109295.

Source : Equity Bulls

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