Sudarshan Chemical Industries (506655) Q1 24/25 earnings summary

Executive summary

• Board changes include retirements and new appointments, aiming to strengthen governance and expertise, with new independent directors effective August 2024.

• Achieved highest ever operative revenue and EBITDA in FY24, with sales growing at a 10% CAGR and operating profit at 11% CAGR since FY11, reflecting a focused pigment business strategy.

• Achieved a long-term credit rating upgrade to AA Stable from AA- Stable by India Ratings, reflecting improved business profile and financial health.

• Received EcoVadis Gold Rating, placing in the top 3 percentile of the chemical sector for ESG performance, and a 'B' rating from CDP for climate change and water security.

• Unaudited standalone and consolidated financial results for the quarter ended 30 June 2024 were approved by the Board on 2 August 2024, with compliance confirmed by statutory auditors.

Financial highlights

• Consolidated income from operations for Q1 FY25 was ₹634 crore, up 4% year-on-year.

• EBITDA for Q1 FY25 increased 16% year-on-year to ₹81 crore, with margin at 12.7%.

• Profit after tax for Q1 FY25 was ₹29 crore, up 38% year-on-year, with margin at 4.6%.

• Earnings per share for Q1 FY25 stood at ₹4.3, compared to ₹3.0 in Q1 FY24.

• Q1 FY24 profit was significantly boosted by a one-time land sale; Q1 FY25 results reflect normalized operations.

Outlook and guidance

• Management expects gross margins to remain in the current range, supported by stable raw material prices and growth in specialty pigments.

• Capex program underway to drive future growth and EBITDA improvement, with a focus on expanding the specialty segment and product portfolio.

• Capacity utilization guidance may be achieved in three years instead of four, with no immediate need for new CapEx; future expansions to be brownfield.

• The Board recommended a final dividend of ₹1.00 per share for FY24, in addition to the interim dividend of ₹3.60 per share, totaling ₹4.60 per share for the year.

• Continued emphasis on sustainability, operational efficiency, and deeper penetration in international markets.