Goal: ₹1,114
CMP: ₹894.70
Sudarshan Chemical has corrected 11 per cent previously six months, nevertheless it has outperformed the NSE Small-Cap Index, which fell 16 per cent, primarily as a result of Heubach acquisition and bettering demand outlook for the dyes & pigment business. Q3 outcomes continued to publish y-o-y progress 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 result of greater working bills and enhance in curiosity value, as a result of 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 change 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 primarily based 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 think about 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 know-how, manufacturing websites within the EU, and merchandise portfolio.
