Sharekhan has given Buy recommendation for Sudarshan Chemical Industries with a target price of Rs. 615 in its research report issued on Jan 29, 2021
Sharekhan’s research report on Sudarshan Chemical Industries
Q3FY21 numbers were strong with better-than-expected revenue growth of 19.6% y-o-y to Rs. 506 crore led by double-digit volume growth while OPM at 15.2% was resilient and in line with estimate. Management hinted at strong demand traction for its product portfolio – coatings, plastics, and inks in domestic and exports market, which would help sustain volume growth in coming quarters. Capex of Rs. 585 crore, new launches (including yellow high-performance pigment) and a likely price hike to pass on raw material costs would drive strong growth in coming years. EBITDA/PAT set to register a CAGR of 20%/25% over FY2021E-FY2023E.
We maintain a Buy on Sudarshan Chemical with a revised PT of Rs. 615, given its dominant position in pigments market, double-digit earnings growth outlook and strong RoE of 23%. At CMP, stock trades at 17.3x FY2023E EPS.
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