Sudarshan Chemicals Q2 sales recover to pre-COVID levels, profits lag

Sudarshan Chemicals reported an increase of 0.95% in top line sales for the Sep-20 quarter at Rs428.91cr.

Oct 23, 2020 06:10 IST India Infoline News Service

Sudarshan Chemicals reported an increase of 0.95% in top line sales for the Sep-20 quarter at Rs428.91cr. The operating profits for the quarter ended Sep-20 were down by 6.91% at Rs45.81cr while the net profits were down by 34.4% at Rs30.33cr on a yoy basis.
This had a logical impact on the margins of the company. For the Sep-20 quarter, the operating profit margins or OPM narrowed by 90 basis points at 10.68% while the net profit margins or NPM for the quarter narrowed by 380 bps at 7.07% due to a spike in raw material costs and higher taxes payable in the quarter.
Financial highlights for Sep-20 compared yoy and sequentially

Particulars Sep-20 Quarter Growth (yoy) Growth (qoq)
Total Revenues Rs428.91cr +0.95% +21.75%
Operating Profit Rs45.81cr -6.91% +45.94%
Net Profits Rs30.33cr -34.36% +66.65%
Key Ratios Sep-20 Quarter Sep-19 Quarter Jun-20 Quarter
Diluted EPS Rs4.40 Rs6.30 Rs2.60
Operating Margins 10.68% 11.58% 8.91%
Net Profit Margin 7.07% 10.88% 5.17%

Key takeaways from the Sep-20 quarter results

  • In terms of product segmentation, almost 95% of the total revenues for the Sep-20 quarter came from the pigments segment. Cash generated from operations fell sharply in the first half on the back of negative working capital cycles.
  • The company management sees a big opportunity in the specialty chemicals business as global chemical consumers in a variety of industries are looking to diversify their business risk away from China. India with a strong chemicals franchise is emerging as a strong contender and this could open the gates for Sudarshan Chemicals.

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