Sudarshan Colorants India Limited

Basic Materials — Specialty Chemicals · NSE

₹352.55−₹2.15 (−0.61%)

DalalBaazaar Score

59 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

High

Driven by high debt relative to equity, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with modest growth. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:09 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Sudarshan Colorants India Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Sudarshan Colorants India Limited engages in the manufacture and sale of specialty chemicals in India and internationally. The company operates through Plastics and Coatings, and Specialty Chemicals segments.

IndustrySpecialty Chemicals

SectorBasic Materials

Employees440

Annual revenue₹775 Cr

How does it make money?

Turns over ₹775 Cr a year. Of every ₹100 of sales, about ₹6 reaches shareholders as profit, with ₹11 left at the operating level before interest, tax and depreciation. Each of its 440 employees supports ₹1.76 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin10.9%

Net margin5.7%

Revenue / employee₹1.76 Cr

Who are its competitors?

The closest listed comparisons in its industry are ASIAN PAINTS LIMITED, PIDILITE INDUSTRIES LTD, SRF LTD, UPL LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

ASIAN PAINTS LIMITEDP/E 46.9x · ROE 22.3%

PIDILITE INDUSTRIES LTDP/E 57.8x · ROE 24.4%

SRF LTDP/E 33.8x · ROE 15.4%

UPL LIMITEDP/E 21.5x · ROE 6.1%

What is its competitive advantage?Little sign of one

Returns on capital of 9.9% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE9.9%

ROE7.8%

Peer median ROE22.3%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +2% while net margin moved +127% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+2%

Margin effect+127%

DalalBaazaar Score

59/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROCE of 9.9% is below 10% — capital is not working hard
• ROCE has been broadly stable
✗ EBITDA margin of 10.9% is thin — little cushion if costs rise
✗ Net margin of 6.0% is slim
• Revenue has compounded at 0.8% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

57/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

80/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

17.0x

3Y Median

31.5x

40 monthly readings · mean 34.4x · range 12.2x–70.9x

Sector Median

40.4x

median of 4 sector peers

🟢Current valuation is approximately 46% below its 3y median of 31.5x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 58% below the peer median of 40.4x.

vs. its own history

Cheap

31.5x median over 40 months · -46%

vs. sector peers

Cheap

40.4x median of 4 peers · -58%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

17.0x

P/B

1.43x

EV/EBITDA

8.3x

PEG

0.53

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 8.7% to 10.9% over 3 years.
Return on equity is rising
ROE has improved from 4.4% to 7.8%.
Valuation below its historical average
At 17.0x the stock trades 46% below its own median of 31.5x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

1 item require attention · 1 high

🔴High leverageFinancial
Debt/Equity of 4.03x — earnings must service borrowings before shareholders see anything.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 8.7% to 10.9%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 46% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 58% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 4.03x. Interest is payable whether or not the business has a good year.
Growth barely outpaces inflation
Revenue compounding at 0.8% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 9%✓ 10.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 4% a year✗ 0.8% CAGR
Latest reported year was 5.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹6 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✓ 9.9%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

6 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 5 neutral · 2 weak

Market Cap

₹814 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

17.0x

Fair

Fairly valued against the generic band

P/B Ratio

1.43x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹20.69

Profitable

Profitable on a per-share basis

ROE

7.8%

Weak

Weak capital efficiency

ROCE

9.9%

Moderate

Moderate return on the capital in the business

Debt/Equity

4.03x

High

High leverage

Revenue Growth (YoY)

5.5%

Modest

Modest growth

Profit Growth (YoY)

19.2%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

₹6 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹352.55

Operating Margin

9.2%

Average

Average margins

Net Margin

6.0%

Average

Average bottom-line conversion

Current Ratio

2.89

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.60

Defensive

Steadier than the market

52W Range Position

31%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

371.9 / 385.3

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

21.4

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹757 Cr	₹781 Cr	₹818 Cr	₹775 Cr	+0.8%
EBITDA	₹66 Cr	₹80 Cr	₹100 Cr	₹84 Cr	+8.4%
EBITDA Margin	8.7%	10.3%	12.2%	10.9%	—
PAT (Net Profit)	₹19 Cr	₹41 Cr	₹51 Cr	₹45 Cr	+32.4%
EPS	₹8.31	₹17.82	₹22.29	₹19.29	+32.4%
ROE	4.4%	8.7%	9.8%	7.8%	—
ROCE	9.0%	11.3%	12.5%	9.9%	—
Total Debt	—	₹27 Cr	₹25 Cr	₹23 Cr	—
Free Cash Flow	₹20 Cr	₹78 Cr	₹99 Cr	₹6 Cr	-34.9%

🟡 Revenue has been broadly flat over 3 years (0.8% a year).

🟢 EBITDA has grown at 8.4% a year over 3 years.

🟢 EBITDA Margin has risen from 8.7% to 10.9% over 3 years (+2.1 pts).

🟢 PAT (Net Profit) has grown at 32.4% a year over 3 years.

🟢 EPS has grown at 32.4% a year over 3 years.

🟢 ROE has risen from 4.4% to 7.8% over 3 years (+3.4 pts).

🟡 ROCE has held roughly flat at 9.9% over 3 years.

🔴 Free Cash Flow has shrunk at 34.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹805 Cr

Total Liabilities

₹235 Cr

Total Debt

₹23 Cr

Cash & Equivalents

₹133 Cr

Operating Cash Flow

₹34 Cr

Capex

-₹29 Cr

Shareholding (proxy)

Institutional Holding

0.1%

Insider Holding

71.1%

Corporate Actions

Ex-Dividend Date

04 Aug 2021

Peer Comparison

Company	P/E	ROE
ASIAN PAINTS LIMITED	46.9x	22.3%
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

2 mixed4 general

Sudarshan Chemical buys Swiss aluminium dyes plant from Clariant for CHF 7 million

scanx.trade, 14 Oct

Sudarshan Colorants India Ltd: Valuation Shifts Signal Renewed Price Attractiveness

MarketsMojo, 16 Oct

Sudarshan Colorants India Share: Bull Case vs Bear Case for 2026

Univest, 25 Sept

Earnings are growing at Sudarshan Colorants India (NSE:SUDARCOLOR) but shareholders still don't like its prospects

Simply Wall Street, 22 JanResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Sudarshan Chemical Industries to acquire 16% stake in Sudarshan Colorants for ₹151 crore

CNBC TV18, 28 SeptM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Compare with CLARIANT CHEMICALS

Equitymaster, 09 Oct

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

🔴Business QualityWeak7.5/20

🟢Financial HealthStrong13.9/20

🟢GrowthStrong13.1/20

🟡ProfitabilityModerate8.3/15

🟢ValuationAttractive12/15

🔴RiskHigh4.3/10

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 9%10.9%
✗Revenue growth stays above 4% a year0.8% CAGR
✓Free cash flow remains positive₹6 Cr
✓Debt / EBITDA stays below 2x0.3x
✓ROCE stays above 8%9.9%