Sudarshan Chemical Industries reported a strong first quarter with a 60% rise in EBITDA and significant debt reduction, but management remains cautious amid geopolitical risks and uneven demand across markets.
Sudarshan Chemical Industries said its first quarter of fiscal 2027 was marked by stronger earnings and faster deleveraging, even as management kept its full-year outlook unchanged because of geopolitical uncertainty. According to a GuruFocus summary of the company’s earnings call, revenue reached ₹2,642 crore and business EBITDA came in at ₹247 crore, more than 60% higher than a year earlier.
The company also highlighted a sharp reduction in borrowings following last year’s acquisition activity. Net debt fell to ₹531 crore from ₹922 crore at the point of acquisition in less than 18 months, with the leverage ratio improving to 0.2. Management said the acquired group’s EBITDA climbed from ₹65 crore to ₹128 crore, helped by cost cuts and better use of the combined business, while the company’s longer-term target remains more than ₹12,000 crore in revenue and ₹1,400 crore to ₹1,500 crore in EBITDA by fiscal 2029.
Even so, Rajesh Rathi, executive chairman and managing director, said the company was not ready to raise guidance after a strong quarter. He pointed to the Middle East crisis, which has pushed up energy and raw material costs and lengthened logistics cycles, and said the company preferred a “wait and watch” stance until after the second quarter. Analysts on the call also questioned whether reported growth was being flattered by price increases and currency effects, while Rathi argued that the business still has room to recover sales lost during earlier ownership changes and integration issues.
The company is also dealing with uneven demand across end markets. Rathi said decorative and automotive paint demand remains weak in the US and Europe, plastics are being affected by short-term polymer price pressure, and volume-led printing inks continue to face structural decline because of digitalisation. At the same time, specialty applications such as agrochemicals and digital products are growing, and the company expects its legacy business to deliver 8% to 10% volume growth in fiscal 2027, according to earlier earnings coverage by Arthneeti and Kotak Neo.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
