ICICI Direct has given Buy recommendation for Sudarshan Chemical with a target price of Rs. 825 in its research report issued on Aug 30, 2021

ICICI Direct’s research report on Sudarshan Chemical

Anti-dumping duty on mica pigment. The Finance Ministry has imposed anti-dumping duty on natural mica-based pearl industrial pigments, excluding cosmetic-grade products. The duty will be ~US$2-3/kg and will be levied for five years. As per the initial document filed by the company, overall import volumes for mica pigment from key geographies is at ~2181 MT at an imported price of Rs 380/kg. The price undercutting is estimated to be ~20-30% as on inquiry date. Mica pigment currently contributes in low single digits to overall revenue of Sudarshan Chemical. Based on our calculation, sales volumes should be ~1300 MT against total capacity of ~3000 MT as per the pre-feasibility study report filed earlier. We expect potential earnings benefits due to price hike to be ~4-5% on FY21 PAT. We have not factored in any potential market share gains due to anti-dumping, going ahead. Any positive development can aid bottomline in high single digits on FY21 PAT.

Outlook

We value Sudarshan Chemical at 25x P/E FY23E EPS to arrive at a revised target price of Rs 825/share (earlier Rs 795/share).

Leave a Reply

Your email address will not be published. Required fields are marked *