Sudarshan Chemical Industries (506655) Q1 25/26 earnings summary

Executive summary

• Completed acquisition and integration of Heubach and Clariant pigment businesses, creating a top-2 global pigment leader with 19 manufacturing sites across 11 countries and a broad product portfolio.

• Q1 FY26 marked the first full quarter post-acquisition, with consolidated sales of ₹2,507 crore and adjusted EBITDA of ₹165 crore.

• Integration efforts focused on harmonizing processes, launching unified GTM strategies, and stabilizing operations, with improved product availability and customer centricity.

• Recognized for sustainability and ESG excellence, including EcoVadis Gold rating, Mahatma Award 2024, and supplier awards from coatings and plastics industries.

• Major board changes included appointment of Rajesh Rathi as Chairman and Managing Director and new independent directors.

Financial highlights

• Q1 FY26 consolidated revenue: ₹2,507 crore, up from ₹633.6 crore in Q1 FY25, reflecting the Heubach acquisition.

• Adjusted EBITDA: ₹165 crore (margin 6.6–6.7%), up from ₹81 crore YoY; EBITDA for Q1 FY26 stood at ₹192.4 crore.

• Pigment segment Q1 revenue: ₹2,456 crore; EBITDA: ₹192.2 crore.

• Net debt at quarter end: ₹1,084 crore, up from previous quarter due to acquisition payments.

• Exceptional items included integration/restructuring costs of ₹32.8 crore and a bargain purchase gain of ₹1,243.9 crore.

Outlook and guidance

• Q1 and Q2 expected to be flat or slightly down, with sales ramp-up anticipated by year-end and improved demand in coming quarters.

• Acquired group targets EBITDA of €35 million in FY26 and €90–100 million by FY28/29.

• Legacy Sudarshan business aims for 8–10% revenue growth by year-end, despite a soft Q2.

• Working capital targeted to reduce from 24–25% to 21% of revenue.

• Purchase Price Allocation for the acquisition is provisional and will be finalized within one year.