Sudarshan Chemical Industries Limited

Basic Materials — Specialty Chemicals · NSE

₹1,137.00−₹7.60 (−0.66%)

DalalBaazaar Score

43 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by small-cap size, which brings sharper price swings, a very high earnings multiple, which leaves little margin for disappointment.

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

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:01 pm

Understanding the Business

Company site ↗

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

What does this company do?

Sudarshan Chemical Industries Limited, together with its subsidiaries, manufactures and sells organic, inorganic and effect pigments, performance colorants, pearlescent pigments, and specialty chemicals in India and internationally.

IndustrySpecialty Chemicals

SectorBasic Materials

Employees1,436

Annual revenue₹9,768 Cr

How does it make money?

Turns over ₹9,768 Cr a year. Of every ₹100 of sales, about ₹0 reaches shareholders as profit, with ₹7 left at the operating level before interest, tax and depreciation. Each of its 1,436 employees supports ₹6.80 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹6.80 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.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 4.6% 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.

Peer median ROE22.3%

What is the outlook?

6 analysts covering the stock expect revenue to grow about 9.2% and earnings to grow about 73.4% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+9.2%

Est. earnings growth+73.4%

Analysts6

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +327% while net margin moved -88% 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+327%

Margin effect-88%

DalalBaazaar Score

43/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 0.6% is weak
✗ ROE has fallen by 4.8 points over the period

Quality vs. Valuation

Company Quality

44/ 100

Weak

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

Valuation

29/ 100

Expensive

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

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

124.9x

3Y Median

94.6x

40 monthly readings · mean 116.4x · range 16.8x–452.4x

Sector Median

40.4x

median of 4 sector peers

⚠️Current valuation is approximately 32% above its 3y median of 94.6x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 210% above the peer median of 40.4x.

vs. its own history

Expensive

94.6x median over 40 months · +32%

vs. sector peers

Expensive

40.4x median of 4 peers · +210%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

15.9x

PEG

—

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 5.4% to 0.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 7.1% to 4.6% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 2 high · 3 watch

🔴Debt has risen sharplyFinancial
Total debt is up 198% over 3 years, from ₹829 Cr to ₹2,473 Cr.
🔴Inventory building faster than salesFinancial
Inventory up 395% against revenue up 327% — stock may not be moving.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 3.3x to 2.0x.
🟡Profit is decliningFinancial
Net profit is down 50% over 3 years.
🟡Margins are compressingFinancial
EBITDA margin is down 2.5 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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?

Margins are being competed away
EBITDA margin has fallen from 9.4% to 6.8%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 3.7x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
The price already assumes success
The stock trades 32% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 5.4% to 0.6%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.

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

1Revenue growth stays above 47% a year✓ 62.3% CAGR
Latest reported year was 5.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 5%✓ 6.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 3.7x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Interest cover stays above 3x✗ 2.0x
How much operating profit can fall before interest stops being comfortably covered.
5Free cash flow remains positive✓ ₹74 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

8 / 12 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
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 5 neutral · 3 weak

Market Cap

₹9,052 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

124.9x

Expensive

Expensive — verify against sector peers

P/B Ratio

2.59x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹9.1

Profitable

Profitable on a per-share basis

ROE

0.6%

Weak

Weak capital efficiency

ROCE

4.6%

Weak

Low return on total capital employed

Debt/Equity

0.64x

Moderate

Moderate leverage

Revenue Growth (YoY)

5.4%

Modest

Modest growth

Profit Growth (YoY)

105.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.44%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹74 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

17.7x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

6.2%

Average

Average margins

Net Margin

0.7%

Weak

Very little revenue reaches the bottom line

Current Ratio

2.06

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.51

Defensive

Steadier than the market

52W Range Position

66%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1201.6 / 1195.3

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

28.7

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,286 Cr	₹2,522 Cr	₹3,324 Cr	₹9,768 Cr	+62.3%
EBITDA	₹214 Cr	₹326 Cr	₹410 Cr	₹666 Cr	+46.0%
EBITDA Margin	9.4%	12.9%	12.3%	6.8%	—
PAT (Net Profit)	₹45 Cr	₹357 Cr	₹56 Cr	₹22 Cr	-20.7%
EPS	₹6.5	₹51.6	₹7.9	₹2.8	-24.5%
ROE	5.4%	31.1%	1.6%	0.6%	—
ROCE	7.1%	33.9%	2.1%	4.6%	—
Total Debt	₹829 Cr	₹467 Cr	₹2,378 Cr	₹2,473 Cr	+44.0%
Free Cash Flow	₹95 Cr	₹115 Cr	-₹23 Cr	₹74 Cr	-8.0%

🟢 Revenue has grown at 62.3% a year over 3 years.

🟢 EBITDA has grown at 46.0% a year over 3 years.

🔴 EBITDA Margin has fallen from 9.4% to 6.8% over 3 years (-2.5 pts).

🔴 PAT (Net Profit) has shrunk at 20.7% a year over 3 years.

🔴 EPS has shrunk at 24.5% a year over 3 years.

🔴 ROE has fallen from 5.4% to 0.6% over 3 years (-4.8 pts).

🔴 ROCE has fallen from 7.1% to 4.6% over 3 years (-2.6 pts).

🔴 Total Debt has grown at 44.0% a year over 3 years.

🔴 Free Cash Flow has shrunk at 8.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹9,723 Cr

Total Liabilities

₹5,869 Cr

Cash & Equivalents

₹933 Cr

Operating Cash Flow

₹344 Cr

Capex

-₹270 Cr

Shareholding (proxy)

Institutional Holding

32.8%

Insider Holding

35.3%

Corporate Actions

Dividend Rate

₹5

Ex-Dividend Date

11 Aug 2026

Analyst Consensus

Recommendations

6 Buy · 0 Hold · 1 Sell

Target Price (Mean)

₹1,344.29

+18.2% vs CMP

Target Range

₹1,029 – ₹1,490

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

1 positive2 mixed3 general

Sudarshan Chemical Industries (BSE:506655) Stock Forecast & Analyst Predictions

Simply Wall Street, 14 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Sudarshan Chemical Share Price rise, valuation and peers

Univest, 18 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Buy Sudarshan Chemical Industries; target of Rs 1450: Anand Rathi

Moneycontrol.com, 17 Aug

Sudarshan Chemical's promoter ups stake through warrant conversion, signaling strong confidence in global gr..

Indiatimes, 18 Jun

Sudarshan Chemical Industries arm sells VP4 Frankfurt for €76.5 Million to focus on Pigments business

CNBC TV18, 01 Sept

Sudarshan Chemical Q1FY27 net profit up 106% to ₹97.3 crore

scanx.trade, 12 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

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

MiddlingFinancial Health · Risk

WeakBusiness Quality · Growth · Profitability · Valuation

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 2 high-severity red flags sit above this conclusion and should be read first.

2 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Interest cover stays above 3x · see Key things to watch ↑