NewsEarningsSudarshan Chemical Revises FY26 Guidance Amid Soft Demand and High Customer InventoriesSudarshan Chemical Revises FY26 Guidance Amid Soft Demand and High Customer Inventories
Sudarshan Chemical Industries has revised its FY26 financial guidance for the acquired group from €35 million to €25-30 million due to soft global demand and high customer inventory levels. The company reported flat revenue growth in the recent quarter, with Q3 expected to remain subdued. Recovery is anticipated from Q4 onwards. Despite these challenges, the company maintains its long-term 3-4 year projections. The pigment industry faces headwinds in coatings and plastics sectors due to high interest rates affecting household demand. Integration of recent acquisitions is progressing positively, with focus on value capture across operations and supply chain optimization.
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Sudarshan Chemical Industries , a leading player in the global pigment industry, has announced a revision in its financial guidance for FY26, citing soft global demand and high customer inventory levels. The company has adjusted its acquired group guidance from €35 million to €25-30 million for FY26, reflecting the current market challenges.
Key Highlights
- Revenue growth remained flat in the recent quarter
- Guidance for acquired group revised downward for FY26
- Q3 expected to remain subdued, with recovery anticipated from Q4 onwards
- Long-term 3-4 year projections maintained despite temporary setbacks
Market Challenges and Inventory Issues
Sudarshan Chemical has faced headwinds due to low demand across most pigment end-use sectors, particularly in coatings and plastics. This softness in demand has been attributed to high interest rates, which have led to lower household demand for paints and automotive products. The company's Managing Director, Mr. Rajesh Rathi, explained that the situation was exacerbated by unexpectedly high inventory levels at customer sites:
"Most of our global customers have degrown. But added to the problem of this degrowth was, as I had mentioned last time, during insolvencies, customers bought above normal stocks not only from Heubach, but products which were similar from competitors."
Financial Performance
The company's financial performance reflects these challenges:
| Metric | Performance |
|---|---|
| Sales Growth (YoY) | Flat |
| Sales Growth (Q2 vs Q1) | 13.00% |
| EBITDA | Flattish |
The legacy Sudarshan pigment business saw flat growth, mainly affected by the coatings market in India. However, the plastics market performed well.
Outlook and Recovery
Despite the current challenges, Sudarshan Chemical remains optimistic about its long-term prospects. The company expects a recovery starting from Q4 of the current fiscal year. Mr. Rathi stated:
"Our 3- to 4-year guideline still remains the same. As I mentioned, this is a temporary phenomenon due to the demand adjustment, and that's the reason why we have to only adjust for this year. Our long-term 3- to 4-years guidance remains the same."
Integration Progress and Value Capture
The company reported positive progress in integrating its recent acquisitions, including stabilizing operations, generating good leads, and launching projects to integrate IT systems. Sudarshan Chemical is also focusing on value capture across various areas, including operations, supply chain optimization, and technical synergies.
Conclusion
While Sudarshan Chemical Industries faces short-term challenges due to soft global demand and high customer inventories, the company maintains its long-term outlook. Management expects a gradual recovery starting from Q4, with ongoing efforts in integration and value capture expected to drive future growth and efficiency.
Historical Stock Returns for Sudarshan Chemical Industries
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.44% | +2.57% | -2.08% | -20.99% | -14.16% | +98.37% |
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