Sudarshan Chemical Industries faces temporary demand dip, revises full-year outlook

Sudarshan Chemical Industries Limited reported flat sales year-on-year for Q2 FY26, with 13% growth quarter-on-quarter. EBITDA remained largely flat. The company's legacy pigment business sales were marginally lower due to softness in Europe and North LatAm regions, while the acquired group experienced soft demand and large customer stock. This led to a lower EBITDA margin, though value capture initiatives helped mitigate a more severe drop.

For the first half of FY26, the legacy Sudarshan pigment and RIECO business saw flattish sales at INR1,340 crore to INR1,330 crore, with EBITDA around INR178 crore. The acquired group’s first-half turnover was INR3,565 crore, generating INR103 crore in EBITDA, at a 3% margin. The company expects Q3 to remain subdued, with a revised full-year projection for the acquired group's EBITDA to be between €25 million to €30 million, down from an earlier €35 million.

Despite the short-term demand challenges, Sudarshan Chemical Industries maintains its long-term 3- to 4-year guidance. The company is actively working on integration, value capture across operations and supply chain, and optimizing supplier landscapes. They aim to reduce net working capital to 24% by FY27 from the current 26.2%.