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With Chemical Sector Gaining, Take a Bet On Sudarshan Chemical

Author: Bappaditta Jana
by Bappaditta Jana
Posted: Dec 30, 2016

With all the changes and developments pushing the Equity market to the higher highs and the pulling it back to lower lows, 2016 has been quite an eventful year for the Indian Investors. While some stocks dipped more than expected, there are few which have been identified by Dynamic Levels as Multibaggers. These Multibagger stocks are expected to grow with time and give good returns.

Sudarshan Chemical is one such Multibagger Stock as identified by Dynamic Levels.

What the Company Does!

Sudarshan Chemical started manufacturing pigments in the year 1952 with a handful of inorganic pigments. It has since flourished with a breadth of products that cover classical azo pigments, effect pigments, high performance pigments and pigment dispersions. The company primarily serves the coatings, plastics, inks and cosmetics markets.

The company is one of the leading pigment producers in India with a domestic market share of 35 per cent. Sudarshan Chemicals is planning to invest around Rs 1,000 crores in new capacities over the next five years at its Roha site. The investment is likely to generate return on assets of four times with an RoCE of 30 per cent, which is likely to boost the revenue growth at approximately 17 per cent (CAGR) over FY2016-20E.

Analysts believe net profit of the company will nearly double from Rs 70 crores in FY16 to Rs 136 crores in FY18. The brokerage has projected revenue of the company to increase from Rs 1,409 crores to Rs 1,828 crores during the same period.

Also, the rating agency India Ratings & Research have recently upgraded Sudarshan Chemical Industries Ltd’s rating to "IND A+"; Outlook Stable w.e.f. 23rdDecember, 2016.

The Specialty Chemical Sector is a Big Support

Specialty chemical industry is one of the innovative, entrepreneurial as well as consumer-driven industries. These specialty chemicals companies comprise low-volume, high-value chemicals with specific applications. They constitute a significant part of the Indian chemical industry.

Growing need for these chemicals in the end-user industries due to their physical as well as chemical characteristics positively impacts the global market growth. The rising population, decreasing arable land, increasing the need for improvement in crop yields, and growing construction sector are some of the factors influencing the growth of specialty chemicals such as pesticides, Specialty coatings and surfactants, and construction chemicals.

Investment Opportunity in Sudarshan Chemical

Sudarshan Chemical share price closed at Rs 311.30. On the last trading day of this year, the share closed with a correction of 1.95 per cent intraday. Dynamic Levels suggests a buy of the share at CMP, with a target of Rs 374, which is its 6 week high.

With right stocks in your portfolio, you can aim for a good growth in 2017. Happy New Year!

About the Author

A writer by day and a passionate reader by night. Writing just doesn't fill my pocket but it also fills my heart. Passion for writing about new events & happenings is what soothes my mind & soul.

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Author: Bappaditta Jana

Bappaditta Jana

Member since: Jun 26, 2016
Published articles: 280

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