What is your views on Fineotex Chemicals? For a long time the price is not moving attractively high.

Ans: Hello Yogesh,

Please find my below comments on Sudarshan Chemical Limited:

1) SCIL is yet to capitalise Rs1.3bn of capex, which should be complete by end-FY23. It has capitalised Rs6.2bn by Dec’22. New capacity utilisation is low despite product approvals from clients due to underlying demand challenges.

2) SCIL expects new capacity to achieve peak utilisation in 3-4 years with incremental revenue potential of Rs15bn.

3) SCIL’s market share in India was stable due to decline in the ink segment; it has improved its market share in coatings. New players entering the coating market also add to the opportunity for SCIL to cement its position;

4) Pune land sale will help deleverage the balance sheet. FY24 will have only maintenance capex of Rs400mn. Debt repayment of Rs1.5bn is likely in FY24.

5) SCIL’s gross profit margin expanded by 210bps QoQ to 40.8% on softening raw material prices, but the benefit was restricted due to 1) high-cost inventory, and 2) the company’s cautious approach to price correction to avoid demand disruption. Gross profit declined 11.7% YoY (rose 5.2% QoQ) to Rs2.2bn, EBITDA dipped 43.6% YoY to Rs416mn, and EBITDA margin was just 7.9%. Forex loss was Rs100mn. SCIL anticipates EBITDA margin to improve with rise in revenues (operating leverage), reducing power and freight costs, and more cost optimisation measures to reduce fixed costs. Net profit fell 98.4% YoY to Rs6mn.

I hope this will help you to take informed decision in Sudarshan Chemicals Limited.

Happy Investing...

Disclaimer: This is just for educational purpose and should not be taken as buy or sell recommendation.

Ans: Quarterly Revenue fell 6.1% YoY to Rs 518.7 Crores. Its sector's average revenue growth YoY for the quarter was 9.6%.
Quarterly Net profit fell 89% YoY to Rs 8.3 Crores. Its sector's average net profit growth YoY for the quarter was -9.3%.
This data is for Dec 2022 quarter so wait for this quarterly result and if there are some positive changes then only hold it, if data is negative its time to exit.

Ans: very poor quality stock, i dont know what it is getting a 40+ P/E.
SYNCOM has delivered a poor sales growth of 7.21% over past five years & it has a low return on equity of 11.6% over last 3 years. Working capital days have increased from 162 days to 233 days. Fundamentals are not good for me

Ans: Growth in Net Profit with increasing Profit Margin (QoQ) but the only issue is with Public holdings so would suggest to stay away.

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Ans: Entire Chemical sector is in problem due to margins as China has opened up with trade. So this sector will stay in downtrend