Goal: ₹1,114
CMP: ₹894.70
Sudarshan Chemical has corrected 11 per cent prior to now 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 trade. Q3 outcomes continued to put up y-o-y development with rise in exports demand. Nonetheless, it noticed some affect 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, as a consequence of increased working bills and improve in curiosity price, 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 following 18-24 months.
We decrease our TP to ₹1,114 from ₹1,186 primarily based on a DCF technique, assuming a 4 per cent (from 5 per cent) terminal development charge and a ten.9 per cent (from 10.6 per cent) price of capital. We reiterate Purchase, as we consider expectations of a y-o-y development, led by new product launches, entry in new geographies, and acquisition of a serious competitor, which provides entry to know-how, manufacturing websites within the EU, and merchandise portfolio.
