Sudarshan Chemical Industries Ltd Initiating Coverage Research Report By Edelweiss

Sudarshan Chemical Industries Ltd. (Sudarshan) is one of the leading global players in the pigment industry with dominant domestic market share of ~35% and presence across inorganic, classical azo, high performance pigment (HPP) and effect pigment segments. Tilt of product mix in favour of high-margin HPP & effect pigment segments, sharpening focus on global markets of Europe and North America, wide distribution footprint and capacity augmentation at Roha site are set to spur 40% earnings CAGR over FY16-18E. At CMP of INR 238, the stock is currently trading at 15x FY17E EPS of INR 15.7 and 12x FY18E EPS of INR 19.7. We initiate coverage with a target price of INR 335.