Sudarshan Chemical Industries (506655) Q3 25/26 earnings summary

Executive summary

• Q3 FY26 reflected continued market softness across legacy and acquired businesses, with customer destocking and lower revenues and profitability.

• The Heubach acquisition expanded the international pigment footprint; integration priorities include customer confidence, synergies, shared culture and process harmonization.

• January and early-February buying by global accounts pointed to easing destocking and a potential demand recovery.

Financial highlights

• Q3 consolidated revenue was ₹2,103.0 crore versus ₹2,387 crore in Q2; adjusted EBITDA was ₹40 crore (1.9% margin) versus ₹116 crore (4.9%). 9M revenue was ₹6,997.3 crore and adjusted EBITDA ₹322 crore (4.6% margin).

• Consolidated net loss was ₹116.0 crore for Q3 and ₹41.7 crore for 9M FY26; Q3 PBT before exceptional items was ₹30 crore, with a ₹46 crore Labour Codes impact noted.

• Standalone Q3 revenue was ₹550.3 crore and net profit ₹22.5 crore; 9M revenue was ₹1,664.0 crore and net profit ₹169.9 crore, both higher than the prior-year periods for net profit and lower for revenue.

• Acquired-group Q3 EBITDA was a loss of ₹38 crore versus a ₹78 crore profit in Q1; employee and other fixed-cost savings were ₹25 crore and ₹15 crore, respectively.

• RIECO Q3 revenue was ₹51 crore versus ₹60 crore in Q2, with marginally negative EBITDA; 9M EBITDA improved to ₹4.2 crore from a ₹20 crore loss a year earlier.

Outlook and guidance

• Global accounts resumed buying at promised levels in January and early February; management expressed confidence in Q4 demand and expected improvement in coming quarters.

• Revised FY26 acquired-business EBITDA outlook was ~€16 million, down from earlier €25 million guidance; Q4 business EBITDA expectation was €9–10 million.

• Inventory reduction of €30–40 million over three quarters is expected to improve working capital, operating cash flow and net debt; lower overhead absorption may reduce reported EBITDA by €9–12 million over the same period.

• Long-term EBITDA target is €90–100 million over three to four years, with benefits from cost actions expected to build gradually.

• Long-term legacy-business growth is expected to return to 10–11%; no Q4 growth target was set for that business.