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Sudarshan Chemicals Limited

Atul in the making........

CMP Rs 95 (FV 2) Analyst : Janak Shah (M.B.A. Finance)

Market Cap Rs 675 crs Date: April 1st , 2016

Target : Rs 130 Time frame : 1 year target

About the Company & Products:

Sudarshan started manufacturing pigments in 1952 with a handful of inorganic pigments and has since flourished with a breadth of products that cover classical azo pigments, high performance pigments, effect pigments and pigment dispersions. Sudarshan primarily serve the coatings, plastics, inks and cosmetics markets.

Financials:

The company would have a book value of over Rs 50 per share expected for year ending March 2016. The company reported sales of Rs 1088 crs and net profit of 42.41 crs with EPS of 6.13 for the year March 2015.

For the year ending March 2016, the Sales is expected to be in the region of 1200 crores and Net Profit of about Rs 62 crores can be achieved with an EPS of Rs 8.5 per share.

The company is seeing good order book position. This year will be a good profitable year for the company. Most of the products are branded and sold through brochures & catalogues. The company paid an intrim dividend of Rs 2.5 per share.

Equity Holding:

Promoters hold about 53% and the public holding is about 47%. Vijay Kedia has acquired more than 3.5% of the equity.

Comparisions to Peers:

The company can be compared to Atul Ltd, Adi Finechem, Meghmani Chemicals, Aarti Industries , Camlin Fine Chem etc which are also in similar field.

 Investments Rationale:

The company is a very well managed conservative company. The last bonus was issued in the year 2014. The company has a very good dividend pay out ratio and is very investor friendly as well in terms of corporate governance. The whole speciality chemicals industry will see a big boom in 2017-2019 and Sudarshan Chemicals will capitalize on the boom.

Price Targets:

At current price of Rs 95 per share the company is available at a low valuation as compared to other Speciality chemical manufacturers. Speciality Chemicals will be the next big thing in the markets. The price can zoom to Rs 130 levels in the next one year.

( Disclosure: The analyst has no holdings in the shares on date of publication of the issue)

The analyst is a sebi certified research analyst. Registration No: INH000001717

( Disclosure: The analyst has no holdings in the shares on date of publication of the issue)

The analyst is a sebi certified research analyst. Registration No: INH000001717

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