November 25, 2020

Budget 2020 My Pick: Keep an eye on this chemical stock for great returns

Budget 2020 My Pick: The Union Budget (#BUDGET2020ZEE) is almost here and investors would be eagerly waiting for the day as well. Zee Business aims to help them with stock selection by giving right insight. With chemical stocks performing well these days, Deepanshu Bhandari, Senior Research Analyst, Zee Business suggests to keep an eye on  Sudharshan stock.


–  It is India’s largest and world’s fourth largest company that produces colour pigments. It has vivid portfolio with Organic, inorganic and effect pigment.
–  It has a market share of 35% in India and globally they have the biggest clients. They export their products in 85 countries.

– If you compare Sudharshan stock  with other chemical companies then it has low cost of manufacturing. This gives the company benefits with margins. If we observe previous quarters the raw material cost has been declining, so there can be a boost to this stock.

– This company is focusing on value added and high margin products. They have huge number of clients which will help them to push their products.

– They have plan to expand their Capex by Rs 1000 crore in next 5 years in order to increase the capacity of the existing plants. It is expected that the revenue of this company will reach from Rs 3500 cr to Rs 4000 cr. In order to boost their Capex and to make their balance sheet debt free, they have sold their Non-Core assets in FY1 which have made their balance sheet healthy.

– Inverted duty structure is imposed on the products of chemical industry. In import products, its less charged and in finished products its highly charged. If its get corrected so, cash flow and consumption will improve and there will be benefit to all chemical companies. As Sudharshan company is the leading one in this industry so they will get most of the benefits.

– If we look at their profit graph, it has increased in last 4 years. In FY16 the profit 70 crore which has increased to 135 crore in FY19. Its expected that they will perform better in future.

You can catch all the updates on Feb 1 with #Budget2020Zee.

Source link