Sudarshan Chemicals – a Good Share to Acquire

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Will Sudarshan Chemicals become one of the top four pigment makers in the world in 2014?

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Sudarshan Chemicals - Latest Results

(in Cr.)
Sep-11
Jun-11
FY10-11
Revenue
209.65
178.28
706.93
Net Profit
13.68
11.22
55.81
EPS
19.77
16.21
80.62
Cash EPS
--
--
--
OPM %
14.17
13.32
14.58
NPM %
6.53
6.3
7.89
Sudarshan Chemicals - Latest Results

Sudarshan Chemicals - Share Price Movement

 
 
 
Weekly H/L
558
480
Monthly H/L
567.85
480
52 Weeks H/L
798.4
480
 
( 2 Sep 11 )
( 20 Dec 11 )
Delivery / Var+ELM %
54.55
30.98
 
 
 
Sudarshan Chemicals - Share Price Movement

Sudarshan Chemicals – a Good Share to Acquire

Sudarshan Chemicals – a Good Share to Acquire
Sudarshan Chemicals – a Good Share to Acquire | Source

Sudarshan Chemicals – a Good Share to Acquire


Acquisition of Eckart’s cosmetics business

Sudarshan Chemical Industries Ltd has come out with good Q2 results for the quarter ended 30.09.11. Both revenue and net profit have increased. The shares of Sudarshan Chemicals are traded in the Indian stock markets at Rs.550 now. Sudarshan Chemicals has bought out Eckart’s mica-based cosmetics portfolio. Eckart is a German company, a part of the Atlanta group. The investment cost involved in the acquisition is not revealed. The acquisition will give Sudarshan Chemical brand names Flonac-C and Prestige. These brand products are being produced at Eckart’s Finnish factory in Pori.

Sumicos brand of pigments

Sudarshan Chemical sells its pigments under the brand name Sumicos. The company will be adding the new pearlescent product lines to its existing pigment portfolio. The entire products under all these brand names will be produced by the company’s Mahad and Roha plants in the state of Maharashtra in India. The deal with the German company will be closed in the third week of January.

Top four pigment manufacturer in 2014?

Sudarshan Chemical is planning to expand and upgrade its Roha plant at an investment cost of Rs.100 crore. The expansion will be financed through debt to the extent of 60% and through internal accrual to the extent of the remaining 40%. The expansion will cover construction of a high performance pigment factory to cater to the high-end plastic industry and automotive coatings. A plant for effective pigments for use in cosmetics and auto industries, a multi-storeyed warehouse spread over an area of 120000 sq ft and a cogeneration plant will complete the expansion and upgradation programme of the company. The company is targeting to become one of the top four of pigment manufacturers in the world by the year 2014. The planned expansion will achieve this mission. Sudarshan Chemical also has plans to expand and upgrade its other plant at Mahad at an investment cost of Rs.100 crore.

India’s largest pigment supplier

Sudarshan Chemical is India’s largest pigment supplier. It has a market share of over 35%. It has presence in Europe and North America and is planning to foray into Latin American and Asia-Pacific markets which are lucrative. Sudarshan Chemical manufactures a wide range of inorganic and organic pigments, agro chemicals and other products. The company’s products are used by many sectors like plastics, coatings, cosmetics, inks, construction equipments and textiles among others. The company’s products find high demand. Exports account for more than 50% of the company’s revenue. Therefore the company will be benefited by the depreciation of Indian rupee against the dollar. As international demand for the company’s products is increasing at a hefty pace, the company’s share of exports will also increase. The company calculates that export share of its revenue in the year 2014 will touch a high of 70%.

Sixty years of history

Sudarshan Chemical has a chequered history spanning over sixty years. The company is exporting its products to more than forty countries in the world. Apart from its European and North American subsidiaries, Sudarshan Chemical has established a subsidiary in China for sourcing raw materials. Sudarshan Chemical has signed a collaboration agreement with Dai Nippon Inks & Chemicals for expanding its business to the Far-East. Similarly the company has signed an agreement with Sun Chemicals to expand to NAFTA and European Union regions.

Hostile takeover possibility slim

Sudarshan Chemical has a strong R&D base in Pune where it has employed more than 100 scientists and technicians. The company faces competition worldwide mainly from four players namely BASF, Clariant, Kiri Industries and DIC India. Sudarshan Chemical has large areas of land which it can sell and realise huge amounts. Promoters hold 53% of the shares of the company. Therefore a takeover possibility is ruled out. DIC of Japan holds around 8% stake in the company. Insurance companies are holding around 3.4% and the remaining shares are held by the public. Floating stock in the company’s counter is very low and it is difficult to buy the shares of the company in the stock market in bulk. The shares are suitable for medium and long term acquisition for decent gains.

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