Sudarshan Chemicals Overview

1. Market Position:

• Market leader in pigments with a substantial 35% market share.
• Largest pigment producer in India, exporting to 85+ countries.
• 3rd largest pigment producer globally.

2. Future Guidance:

• Recently commissioned capacities expected to drive future growth.
• Anticipated ROCE improvement with higher utilization.
• Focus on expanding product portfolio and international presence.
• Positive outlook for H2 FY24, with gradual margin expansion.

3. New Product Launches:

• Launched Sudatherm Cobalt Blue 6421K and Sudatherm Cobalt Green 6451K.
• Benefiting from the “China plus one” strategy.

4. Financial Highlights (Q2FY24):

• Revenue increased by 14% to ₹601 Cr.
• EBITDA showed significant growth of 53% at ₹66 Cr, with 10.9% margins.
• Net profit surged by 293%, reaching ₹18 Cr.
• Strong Operating Cash Flow at ₹77 Cr, compared to ₹54 Cr YoY.
• Debt-to-Equity (D/E) ratio improved to 0.57 from 1.2 YoY.

5. Key Risks:

• Caution due to evolving geopolitical situations and global macroeconomic conditions.
• FY23 challenges for the Pigment Industry with subdued demand, higher input prices, and destocking.

6. Sudarshan Overview:

• State-of-the-art infrastructure with a focus on ESG.
• 2 manufacturing plants in Mahad & Roha and a dedicated R&D center.
• Captures a 35% domestic market share.
• Global pigment market presents an $8.6bn opportunity.

7. Future Strategies:

• Positioned for sustainable growth in India’s pigment manufacturing.
• Focus on expanding market share in coatings, inks, plastics, and cosmetics.
• Strategic goals include portfolio enhancement and global footprint expansion.

8. Prominent Investors:

• Vijay Kedia holds a 1.44% stake in the company.

9. Key Metrics:

• Market Cap: ₹3200 Cr.
• Price to Cash Flow (P/CFO): 11.
• ROCE and ROE expected to improve.
• Attractive valuations with a double-digit growth outlook.
• Margins may expand to 14-15% from the current 10-11%.

Conclusion:
Sudarshan Chemicals, as a market leader in pigments, demonstrates strong financials, strategic initiatives, and a positive growth outlook. The focus on capacity expansion, new product launches, and international penetration positions the company for sustained success. However, monitoring geopolitical risks and industry challenges is essential for a comprehensive investment decision.