Profit of Vijay Kedia's chemical bet fell in Q3; still worth considering?
A few brokerages have retained their 'buy' rating on the stock, as they see the impact of price hikes undertaken recently to be visible in the coming months. Kedia held a 1.44 per cent stake, Akash Bhanshali 2.25 per cent and Amansa 3.15 per cent ...
Sharekhan said the bottom line was above its estimates as robust revenue growth at 19 per cent and lower depreciation offset the continued contraction in the margin that was down 345 bp at 12.3 per cent.
But that actually came in better than analysts estimates. A few brokerages have retained their 'buy' rating on the stock, as they see the impact of price hikes undertaken recently to be visible in the coming months. Kedia held a 1.44 per cent stake, Akash Bhanshali 2.25 per cent and Amansa 3.15 per cent at the end of the December quarter. Sharekhan said the bottom line was above its estimates as robust revenue growth at 19 per cent and lower depreciation offset the continued contraction in the margin that was down 345 bp at 12.3 per cent.
"Sudarshan is well-placed to grow above industry rates supported by its dominant market share (35 per cent share in the Indian pigment market and fourth-largest player globally), the exit of global players from the space and near-completion of capex plans to expand capacity. Thus, we model revenue, Ebitda, and PAT CAGRs of 19 per cent, 18 per cent and 20 per cent, respectively, over FY2021-FY2024," Sharekhan said while suggesting a target of Rs 760 on the stock.
The target suggests a potential 33 per cent upside over Thursday's price of Rs 572.15.
ICICI Securities said the company has been taking price hikes to pass on inflation, the benefit of which should come in the next quarter as well. It sees acceleration in revenue growth from March quarter with encouraging response for its new products and commercialisation of new facilities.
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"Sudarshan is likely to complete its capex spend by FY23 and thereafter focus on increasing utilisation and FCF generation. While we cut our FY22E EPS by 9 per cent, we increased the same for FY23 and FY24 by 5.7 per cent and 3.1 per cent, respectively," the brokerage said while upping its target on the stock to Rs 683 from Rs 668.
