Anand Rathi's research report on Sudarshan Chemical
Sudarshan Chemical delivered a weak performance in Q2 FY26, led by temporary demand slowdown in the US/Europe and heavy customer destocking built during the insolvency phase. Revenue came in at Rs23.9bn (down 5% q/q; not comparable on y/y basis), with Heubach contributing Rs16.8bn (down 11% q/q) and legacy pigments contributing Rs6.5bn (up 13% q/q; flat on y/y basis). EBITDA stood at Rs1.17bn, split between Heubach (Rs250m; 1.5% margin vs. 4.1% in Q1) and legacy pigment business (Rs850m; down 18%y/y; 13.2% margin). Whilst the management trimmed FY26 EBITDA guidance for Heubach to €25-30m (from €35m earlier), it reiterated long-term €90-100m target by FY28/29 as synergies materialise.
Outlook
We remain positive on the combined platform over the long-term and maintain BUY rating with a lowered SOTP-based 12-mth TP of Rs1,540 (implying 12.4x Sep’27E EV/EBITDA), reflecting near-term softness.
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