Sudarshan Chemicals – Turnaround Story?

Q4FY23 Concall Notes

1. Revenue has increased by 31% to INR 691cr in Q4FY23 compared to INR 528 Cr of Q3’FY23. Received 356 crore in terms of our land monetization which will be used to lower the debt.
2. EBIDTA has grown by 100% + at Rs 85 Cr compared to Rs 42 Cr of Q3’FY 23 with improvement in EBIDTA margin from 7.90% in Q3 to 12.3% in Q4’FY23.
3. Working Capital days reduced from 90 to 74 days.
4. In both, domestic and export markets, we have seen early sign-of demand revival in plastic and coating segment.
5. Volatility in raw material prices which was seen since last 3 quarters is softening due to drop in basic cost drivers such as crude oil, benzene, toluene.
6. Apart from RM costs, energy costs, coal prices and logistics cost are also softening.
7. Tailwinds: consolidation of top players in the industry, supply disruptions from prominent player in North America, emergence of India as key global manufacturing industry and others mentioned in point 4 and 5.
8. All CAPEX done. All products (these are specialty products) are put to use and several chemistries (violet 23, yellow 138 etc.) have been launched. They are getting approvals (varies between three months to six months) and focusing on sales.
9. In short term there will be slow ramp up but from a perspective of 3-4 years the CAPEX will bear fruits.
10. Company plans to increase domestic market share in Specialty Side. (good tailwinds coming in with lot of investment in the paint section a and we are really focusing on the participating on that growth only)
11. The Specialty and Non-Specialty share is 69% and 31% respectively and growth is coming from both domestic as well as export.
12. Key geographic areas reviving: Americas (even South America), Europe (on boarded BASF subsidiary BTC as a distributor), Korea, Japan.
13. Competition with China: Not able to compete in commodity products, presence of Chinese players is less in Specialty and Sudarshan is able to compete there.
14. Company expects to achieve 3000 – 3300 cr topline in next 3-4 years (with the current normalized rising scenario)