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

Executive summary

• Consolidated Q3 FY26 results reflect continued market softness, with both legacy and acquired businesses experiencing lower revenues and profitability compared to the previous quarter and year-over-year.

• Unaudited standalone and consolidated financial results for the quarter and nine months ended 31st December 2025 were approved, reflecting the impact of a major acquisition and regulatory changes.

• The group completed the acquisition of Heubach Group's global pigment business in March 2025, significantly expanding its international footprint.

• Integration of acquired group progressing, with SAP system harmonization and cost-saving initiatives underway.

• Customer destocking and high inventory levels persist, but early signs of demand recovery are visible in January and February.

Financial highlights

• Q3 FY26 consolidated revenue from operations was ₹2,103 Cr, down from ₹2,387 Cr in Q2 FY26, but up from ₹666.4 Cr in Q3 FY25 due to the Heubach acquisition.

• Adjusted EBITDA for Q3 FY26 was ₹40 Cr (1.9% margin), compared to ₹116 Cr (4.9% margin) in Q2 FY26; consolidated EBITDA was ₹37.9 Cr for Q3 FY26.

• Q3 FY26 PBT before exceptional items was ₹30 Cr, with reported PBT at -₹77 Cr due to a ₹46 Cr impact from the new labour code.

• Consolidated net loss for Q3 FY26 was ₹116 Cr, compared to a profit of ₹0.5 Cr in Q3 FY25; nine-month consolidated net loss was ₹41.7 Cr.

• Exceptional items included a statutory impact of new Labour Codes and acquisition-related costs.

Outlook and guidance

• Management expects the worst of the downturn is over, with customer trust returning and destocking easing.

• Revised FY26 business EBITDA outlook for the acquired group is ~€16 Mn, down from earlier €25 Mn guidance.

• Q4 FY26 expected to see positive sales momentum and ongoing value capture, but reported EBITDA may be temporarily lower due to inventory reduction.

• Financial results for the period include the impact of the Heubach acquisition and are not comparable with previous periods.

• The group continues to monitor regulatory developments and expects further adjustments as final rules on labour codes are clarified.