Gladiator Stocks - Sudarshan Chemical: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Sudarshan Chemical

Strategy

Buy Sudarshan Chemical in the range of Rs 550.00–562.00 for target price of Rs 650.00 with a stop loss of Rs 508.00. Time Frame: Six months

Technical View

Chemical space after the sharp up move of April-September 2020, witnessed a breather in the last three to four months, with shallow price correction, thus exhibiting resilience. The stocks are resuming a fresh up move signalling strengt. The share price of Sudarshan Chemical recently generated a resolute breakout above the multiple highs seen since August 2018 (around Rs 510) and is sustaining above the same, thus offering a fresh entry opportunity. We expect the stock to continue its current uptrend and head towards Rs 650 levels as it is confluence of the upper band of the rising channel in place since May 2020 and 161.8% extension of the previous up move (Rs 440 to 528) as projected from recent trough of Rs 496 signalling upside towards Rs 650.

Fundamental View

Global market opportunities relevant to Sudarshan to be valued at ~$ 8.6 billion. The pigment industry is relatively mature and is globally expected to grow at ~3% CAGR over the next 5 years. It is expected that India is set for strong, sustainable growth in pigment manufacturing with substantial export opportunities. Sudarshan has earmarked an aggressive capex plan of Rs 585 crore (Rs 225 crore spent in FY20) largely spend on capacity addition for growth projects (new and existing) mainly in margin accretive HPP and speciality segments. Post pandemic, we expect the company to grow at ~12% CAGR in FY21-23E amid 20-25 annual new launches, capacity addition and strong demand. The company’s operations and demand from end users are reverting back to normal as the economy opens up. H2 is also likely to benefit amid some pent-up demand. With favourable macro factors and strong domestic demand are key catalysts for it. Margins are also likely to improve due to backward integration and change in product mix towards margin accretive products.

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