Sudarshan Chemical Research Reports By Edelweiss

Sudarshan Chemical Industries Ltd. (Sudarshan) reported standalone Q1FY17 sales at INR 337 cr, 1% below our estimates but up 14% YoY. EBITDA and PAT were higher than our estimates by ~12% and ~16% respectively on account of lower raw material costs, improved productivity and slightly lower effective tax rate. Key highlights of the quarter were: (i) 12% YoY revenue growth in the standalone pigments business coupled with a two year high EBIT margins of 19.8% (ii) Standalone agrochemical sales registered the highest quarterly sales over the past two years of INR 50 cr, registering an increase of ~28% YoY. We have upgraded our consolidated FY17/18 net profit estimates by 8-9% considering the robust growth outlook and the margin expansion exhibited by the company in the current quarter; we reiterate our ‘BUY’ rating on the stock with a revised target price of INR 366/share.”