Sudarshan Chemicals posted Q4FY24 financial results with a total income of Rs 764 crores compared to Rs 691 crores for the same period of last year. EBITDA for the quarter was up by 41% at Rs 119 crores compared to Rs 85 crores while the EBITDA margin stood at 15.6% as compared to 12.3% over the same period of last year.
Profit after tax stood at Rs 57 crores for Q4FY24 as against Rs 33 crores for the same quarter of last fiscal. The company’s pigment business segment posted decent Q4FY24 financial results with income from operations at Rs 644 crores growing up by 8% over Rs 594 crores as of last year.
While domestic sales for the last quarter were Rs 345 crores as against Rs 301 crores of the same quarter of last fiscal, exports grew from Rs 293 crores to Rs 299 crores in Q4FY24. The company reported flat export sales on the back of geopolitical issues and challenges in the European region, while on the other hand North American market continues to register double-digit growth.
The gross margins of the pigment business during Q4FY24 increased by 250 basis points to 44% as against 41.5% for the same period of last year. EBITDA of Rs 100 crores during the quarter was the highest ever achieved by the company in the pigment pigment business. From the balance sheet perspective, Sudarshan Chemicals has improved its financial ratios by reducing its net debt from Rs 434 crores in Q4FY23 to Rs 394 crores in Q4FY24.
With the overall good results from the operation and monetisation of assets during Q4FY24 , the debt of Sudarshan Chemicals has reduced substantially resulting in better financial ratios. There has been a major shakeup in the global pigment industry after Germany-based chemical player, Heubach which is the world’s biggest pigment manufacturer filed for bankruptcy in April 2024. Apart from Heubach, another major MNC pigment player closed its facility in recent times.
There have been other top players such as BASF and Clariant who have recently undergone mergers and acquisitions to trigger a consolidation within the chemical industry. The shake-up in the pigment industry has opened opportunities for Sudarshan Chemicals to fill the void and emerge as a major large player in the global chemical industry.
Research analysts at various brokerage houses are quite bullish on the Sudarshan Chemicals scrip as they highlight the fact that 80% of its portfolio overlaps with the other troubled players and can gain meaningful market share in the export market with the help of its newly commissioned capacity completed with a Rs 750 crore capital expenditure undertaken during the last few years .
As per data available, Sudarshan Chemicals stock has been accumulated by various large Mutual Fund houses in their portfolios over the last few months from a long-term investment horizon. The stock currently quoted at Rs 915 is a very good fundamental buy and can deliver decent price appreciation over the next one-year time frame.