By Hdfc Securities Institutional Equities

Copyright ndtvprofit

Post acquiring Heubach, the global pigment market share of Sudarshan Chemical has increased to ~12% in pigment business excluding black and white pigment. The company has started optimizing the resources at consolidation. The company has initiated a customer-centric approach to push pigments in European and other markets and to gain market share. However, the brokerage believes the company will face headwinds due to weak demand, high inventory level at the customer end, and strong competition..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities.The Sudarshan Chemical Industries Ltd. stock has run up more than 60% in the past seven months as the company has initiated integration with Heubach. The combination of cutting-edge technologies, a diverse product portfolio catering to a wide range of customer needs, and Heubach’s expansive global production and service network uniquely position the company to serve a worldwide customer base in coatings, plastics, inks, and specialty applications. This comprehensive offering enables Sudarshan Chemical to deliver industry-leading products and services with a global reach. Operational optimization and cost reduction programme undertaken by Sudarshan Chemical will improve efficiency. However, the gains from the synergy will take time to realize as it is a multi-geography, multi asset integration. Weak demand in global pigment markets, high inventory level at the customer end, and strong competition are adding to the woes. The global pigment manufacturers are uncertain over the demand outlook owing to geopolitical situation and ongoing tariff war. The intense competition from global players shall curb any potential price hike in the near term. We expect Ebitda to increase from Rs 7.88 billion in FY26 to Rs 9.36 billion in FY28 at a 9% CAGR. Earnings per share is expected to grow at 20% CAGR from FY26-28E. The stock is trading at EV/Ebitda 15.2/13.8/12.5x FY26/27/28, which is 33-166% premium to global peers. We believe the current valuation is contextually high. Thus, we are downgrading Sudarshan Chemical from Add to Sell with a target price of Rs 1,175/share..Click on the attachment to read the full report:.Mahanagar Gas Shares Can Rally 37% Says Motilal Oswal; Stock Remains Top Pick Among CGDs .DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.