Buy Sudarshan Chemical Industries, target price Rs 620: HDFC Securities

HDFC Securities has buy call on Sudarshan Chemical Industries with a target price of Rs 620. The current market price of Sudarshan Chemical Industries is Rs 425.35. Time period given by analyst is one year when Sudarshan Chemical Industries Ltd. price can reach defined target.

Sudarshan Chemical Industries Ltd., incorporated in the year 1951, is a Mid Cap company (having a market cap of Rs 2951.50 Crore) operating in Chemicals sector.

Sudarshan Chemical Industries Ltd. key Products/Revenue Segments include Inorganic Pigments, Export Incentives and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 628.87 Crore, up 4.23 % from last quarter Total Income of Rs 603.32 Crore and up 8.63 % from last year same quarter Total Income of Rs 578.88 Crore. Company reported net profit after tax of Rs 44.66 Crore in latest quarter.

Investment Rationale
The brokerage maintains a BUY recommendation on Sudarshan Chemical (SCIL), with a target price of INR 620/share. It expects SCIL's PAT to grow at 39% CAGR over FY22-24E, led by 32% CAGR in EBITDA. Two major global players shifting away from the pigment business is a tailwind for Indian pigment manufacturers. It believes SCIL is in a sweet spot to seize this opportunity through product offerings similar to those of global players. Q4 EBITDA/APAT were 4/34% above estimates, owing to a 7% higher revenue, lower-than expected depreciation, lower-than-expected finance cost, and lower-than expected tax outgo.

Promoter/FII Holdings
Promoters held 35.82 per cent stake in the company as of 31-Mar-2022, while FIIs owned 7.93 per cent, DIIs 11.54 per cent.