Hold Sudarshan Chemical Industries; target of Rs 1117: LKP Research

LKP Research recommended hold rating on Sudarshan Chemical Industries with a target price of Rs 1117 in its research report dated October 11, 2024.

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October 14, 2024 / 11:53 IST

hold

26 Aug, 2025 12:21

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LKP Research's research report on Sudarshan Chemical Industries

Sudarshan Chemical Industries (SCIL)’s global subsidiary Sudarshan Europe B.V. has entered into a definitive agreement to acquire the Global Pigment Business Operations of the Heubach Group. The acquisition is valued at approximately ₹11.8 bn and is expected to be completed within next 3-4 months. This deal is seen as a significant move by SCIL to expand its footprint in the global specialty chemicals industry, with Heubach’s operations spanning across 19 sites worldwide. This acquisition will not only bolster SCIL’s product portfolio but also enhance its access to key markets in Europe, the Americas, and the Asia-Pacific region. The acquisition is in line with SCIL’s strategy to explore new geographies be it in Asia, Europe or South America in a bid to increase sale. Sudarshan is a leader in the domestic market, commanding a 35% market share. The Company leverages its expansive product portfolio, combined with the resilience of the Indian economy, to ensure sustained growth in domestic and export markets. This acquisition would increase SCIL’s revenue from ₹2.5 bn to ₹10.6 bn a whopping >4x jump in its revenues (as of current EUR-INR rate).

Outlook

We further continue to believe in the abovementioned tailwinds and hence we retain our forecasts, with further clarity on the Heubach’s global entity financials we will update the financials and TP for SCIL. Even after a ~15% jump in the stock price it currently trades at 34x its FY26 EPS of ₹35 (as per our estimates for SCIL). We have factored in FY25E/FY26E EBITDA margin of 14.6%/16%. For now we give ‘HOLD’ rating on SCIL and expect Revenue/EBITDA/PAT CAGR of 13%/36%/75% respectively mainly owing to continued uptick in domestic as well as export sales led by its Specialty portfolio.

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