Goal: ₹1,114
CMP: ₹894.70
Sudarshan Chemical has corrected 11 per cent previously six months, but it surely has outperformed the NSE Small-Cap Index, which fell 16 per cent, primarily because of the Heubach acquisition and bettering demand outlook for the dyes & pigment business. Q3 outcomes continued to submit y-o-y progress with rise in exports demand. Nonetheless, it noticed some impression from weak coating demand and stock de-stocking.
Based mostly on 9MFY26 financials, we trim FY26E and FY27E EPS by 27 per cent and 28 per cent, respectively, because of larger working bills and improve in curiosity value, because of the Heubach acquisition. We count on a income CAGR at 10 per cent and an EBITDA CAGR at 16 per cent throughout FY24-27. Administration says it’s persevering with to work on a metamorphosis plan for its subsidiary, RIECO. The transformation will happen over the subsequent 18-24 months.
We decrease our TP to ₹1,114 from ₹1,186 based mostly on a DCF methodology, assuming a 4 per cent (from 5 per cent) terminal progress charge and a ten.9 per cent (from 10.6 per cent) value of capital. We reiterate Purchase, as we consider expectations of a y-o-y progress, led by new product launches, entry in new geographies, and acquisition of a significant competitor, which supplies entry to expertise, manufacturing websites within the EU, and merchandise portfolio.
