Shares of Sudarshan Chemical Industries climbed over 14 percent intraday on May 24, a day after the company posted strong sequential growth for the quarter ended March.
The dye maker reported a 30 percent on-quarter rise in revenue at Rs 692 crore on the back of strong growth in pigment exports market and demand revival. On an on-year basis, revenue was up 10 percent.
As the revenue surge outpaced the spike in expenditure, operational performance also improved sequentially. The company's EBITDA (earnings before interest, taxes, depreciation, and amortization) margin, though was down 140 basis points on-year, expanded a whopping 450 bps on a sequential basis to 12.3 percent in the January-March period.
Aided by the strong operational and topline beat, the company's net profit also surged nearly two-fold on quarter to Rs 33 crore in Q4. Net profit in the corresponding quarter of the previous fiscal was at Rs 45 crore.
At 12.49pm, shares of Sudarshan Chemical Industries were trading with gains of 13.25 percent at Rs 445.40 on the National Stock Exchange.
Volumes were also sharply higher as 31 lakh shares of the company changed hands on the exchanges, significantly more than the one-month daily traded average of 68,000 shares.
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Brokerage firm ICICI Securities also remains positive on the company. The firm was positively surprised by the strong growth in export markets even as it anticipated an improvement in the domestic market due to demand revival.
The broking firm also awaits more clarity from the management on the margin front that despite its improvement, still has to cover a significant ground in order to reach optimum levels.
Going ahead, the company expects gradual sales ramp-up of new capital expenditure projects to drive growth in the coming quarters.
On top of that, the company is also focusing on expanding its product portfolio while focusing on controlling net working capital and inventories to optimise the cash conversion cycle.
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