Buy or Sell: Sudarshan Chemical Share Price Target 2024, 2025, 2030 Long-Term Prediction

An effective method for evaluating the Sudarshan Chemical share price Target is by examining research reports and analyses conducted by reputable financial institutions and brokerage firms. The latest research reports are available on Sudarshan Chemical.

Sudarshan Chemical Share Price Target

The financial services firm HDFC Securities published the latest research report on Sudarshan Chemical Share Price Target, assigning a ‘Sell’ rating with a share price target of Rs. 487 from its current market price of Rs. 533 as of 05 Feb 2024.

Despite offering products comparable to global players, Sudarshan Chemical has struggled to capture market share following the departure of major international competitors. This has influenced the trading dynamics of the company’s stock, which is currently valued at 24 times the estimated earnings per share (EPS) for the fiscal year 2025. Analysts consider this valuation relatively high, especially when considering the return on equity (RoE) projections of 11% and 18% for the fiscal years 2024 and 2025, respectively.

The third-quarter financial results of Sudarshan Chemical saw some mixed performance indicators. While revenue witnessed a modest 7% year-on-year growth, it experienced a 6% sequential decline, amounting to INR 5,658 million. Similarly, earnings before interest, taxes, depreciation, and amortization (EBITDA) witnessed a significant 49% year-on-year surge but decreased by 6% sequentially to INR 619 million. Despite these fluctuations, the EBITDA margin improved to 11%, primarily attributed to lower raw material and coal costs.

The pigment segment, a significant revenue contributor for Sudarshan Chemical, observed a 7.9% year-on-year growth in revenue but remained stagnant on a quarterly basis, totaling INR 5,215 million. The segment’s EBIT also displayed a notable increase of 354% year-on-year and 3% sequentially, reaching INR 392 million. However, the company faced challenges in adjusting product prices to offset changes in the product mix.

Analysts note several key takeaways from the earnings call. Export revenues for the pigment segment slightly declined to 47% from 48% in the previous quarter, with expectations of improved demand domestically and in the US market in the fourth quarter of the fiscal year 2024. Despite a subdued European market, the plastics industry is anticipated to witness favorable demand trends. Additionally, the company has made strides in reducing its working capital cycle and aims to optimize capacity utilization for new products within four years.

However, challenges persist in the non-pigment segment, primarily attributed to cost overruns due to project execution delays. Sudarshan Chemical has managed to reduce its net debt substantially from INR 9.46 billion to INR 4.34 billion compared to the same quarter in the previous fiscal year. Moreover, the recent increase in freight costs due to the Red Sea crisis may impact the company’s margins, although management remains confident in sustaining a gross margin of approximately 45%.

Sudarshan Chemical Industries Limited (SCIL), a prominent player in the chemical industry, has been under scrutiny regarding its share price target. Analysts have maintained a cautious stance on the company, setting a price target of INR 487. This target comes with considerations of various factors such as the weighted average cost of capital (WACC) at 11% and a terminal growth rate of 3.5%.

To analyze the Sudarshan Chemical Share Price Target prediction, I will employ technical analysis and machine learning models, specifically focusing on chart patterns, market trends, and historical performance data.

About Sudarshan Chemical Company

Sudarshan Chemical Industries, based in Pune, Maharashtra, is a leader in the pigment industry in India with a heritage stretching over seven decades. The company offers a wide range of pigments for various applications like coatings, plastics, inks, and cosmetics.

Their product line includes organic, inorganic, and effect pigments as well as pigment dispersions. With state-of-the-art manufacturing facilities adhering to international quality standards, Sudarshan has a strong global presence, spanning over 85 countries. The company is dedicated to innovation, quality, and sustainability, aiming to be among the top three pigment manufacturers worldwide.

Strengths–

Steady Revenue Growth: Sudarshan Chemical has consistently increased its total revenue, reflecting strong market demand and effective sales strategies. Total revenue reached ₹24,507,530,000 in the trailing twelve months (TTM) period, showcasing the company’s ability to generate substantial income.

Healthy Gross Profit Margin: The company maintains a healthy gross profit margin, indicating efficient cost management and pricing strategies. With a gross profit of ₹10,149,320,000 in the TTM period, Sudarshan Chemical demonstrates robust profitability in its core operations.

Positive Operating Income: Despite operating expenses, Sudarshan Chemical maintains positive operating income, showcasing operational efficiency and profitability. The company recorded an operating income of ₹1,600,720,000 in the TTM period, indicating effective management.

Weaknesses–

Declining Net Income: Sudarshan Chemical’s net income has shown fluctuations over time, with a decrease from ₹1,445,330,000 in 2020 to ₹447,690,000 in the TTM period. This indicates challenges in maintaining consistent profitability and efficiency.

High Operating Expenses: The company incurs significant operating expenses, which may impact overall profitability and financial performance. Operating expenses amounted to ₹8,548,600,000 in the TTM period, suggesting potential areas for cost optimization.

Opportunities–

Market Expansion: Sudarshan Chemical has the opportunity to expand its market presence both domestically and internationally, leveraging its strong product portfolio and industry expertise. Exploring new markets and customer segments could drive revenue growth.

Research and Development: Investing in research and development (R&D) activities can lead to product innovation and differentiation, allowing Sudarshan Chemical to stay ahead of competitors and capture new market opportunities.

Threats–

Volatility in Raw Material Prices: Sudarshan Chemical may face challenges due to fluctuations in raw material prices, impacting production costs and profit margins. Volatility in input costs could pose risks to the company’s financial stability.

Regulatory Compliance: Compliance with stringent environmental regulations and safety standards in the chemical industry poses challenges for Sudarshan Chemical. Non-compliance could lead to fines, reputational damage, and operational disruptions.

Peer Comparison of Sudarshan Chemical

How to Buy Sudarshan Chemical Share

• Click on the “Open an Account in Upstox“
• Fill in the required details
• Complete the verifying your identity
• Login to Your Account
• Search for Sudarshan Chemical
• Place an Order.

To stay updated with the latest information related to the stock market and receive live stock market updates, follow Sharedhan and stay connected with us. Check out Today’s Share Market Open or Closed India.