Sudarshan Chemical Industries demonstrates fast growth
03-06-2016 • About Sudarshan Chemical Industries (
$SUDARSCHEM) • By InTwits
Have you thought about Sudarshan Chemical Industries as a growth stock? Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Sudarshan Chemical Industries showed fast growth in the last financial year. Sudarshan Chemical Industries's revenue surged on 15.3% in FY2016. The growth also happened in EBITDA of 29.3% for the same period.
If we look for the longer period Sudarshan Chemical Industries showed fast revenue growth of 17.0% from FY2013 to FY2016 annually. EBITDA surged on 29.1% from FY2013 to FY2016 annually.
Sudarshan Chemical Industries ($SUDARSCHEM) financials for the last 5 years
| mln. INR | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Revenue | 8,003 | 8,729 | 11,186 | 12,117 | 13,973 |
|---|
| Revenue growth, % | | 9.1% | 28.2% | 8.3% | 15.3% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 846 | 780 | 1,333 | 1,298 | 1,677 |
|---|
| EBITDA growth, % | | -7.8% | 70.9% | -2.6% | 29.3% |
|---|
| EBITDA margin, % | 10.6% | 8.93% | 11.9% | 10.7% | 12.0% |
|---|
| Net Income | 336 | 220 | 350 | 544 | 699 |
|---|
| Net Income margin, % | 4.19% | 2.52% | 3.13% | 4.49% | 5.00% |
|---|
| |
| CAPEX | 875 | 1,207 | 309 | 567 | 851 |
|---|
| CAPEX/Revenue, % | 10.9% | 13.8% | 2.76% | 4.68% | 6.09% |
|---|
| Debt | 2,383 | 4,367 | 4,405 | 4,325 | 4,296 |
|---|
| Cash | 337 | 418 | 147 | 212 | 206 |
|---|
| Net Debt/EBITDA | 2.4x | 5.1x | 3.2x | 3.2x | 2.4x |
|---|
| |
| ROIC, % | 14.1% | 8.5% | 13.2% | 11.9% | 15.8% |
|---|
| ROE, % | 14.4% | 8.8% | 13.3% | 20.4% | 24.3% |
|---|
Profitability and return on investment
EBITDA growth was supported by margin expansion. The company's EBITDA margin surged on 1.30 pp from 10.7% to 12% in FY2016. In the longer period Sudarshan Chemical Industries showed fast EBITDA margin growth of 3.10 pp from 8.90% in FY2013 to 12% in FY2016.
Sudarshan Chemical Industries shows attractive ROIC at 15.8% for the last 12 months which assumes stable development model. Three years ago it was lower at 8.46%. For the last three years the average ROIC was 13.6%.
The company showed fast Net Income margin growth of 0.500 pp from 4.50% to 5% in FY2016. In the longer period Net Income margin surged on 2.50 pp from 2.50% in FY2013 to 5% in FY2016.
Sudarshan Chemical Industries operates at ROE of 24.3%. It's average level of ROE for the last three years was 19.3%.
Capital expenditures (CAPEX)
To fuel this fast growth the company had to invest in CAPEX.The company's CAPEX/Revenue was 6.09% in FY2016. The company's CAPEX/Revenue dropped on 7.74 pp from 13.8% in FY2013 to 6.09% in FY2016. It's average CAPEX/Revenue for the last three years was 4.51%.
Leverage (Debt)
Sudarshan Chemical Industries has medium debt level at 2.4x Net Debt/EBITDA to maintain high growth. In the last 3 years the company's leverage dropped on 2.63x from 5.07x in FY2013 to 2.44x in FY2016.
Valuation vs. comparable companies
At the end of trading day today Sudarshan Chemical Industries traded at 7.8x EV/EBITDA which is 68.1% lower than 24.5x Specialty Chemicals peer group avearge calculated on the basis of 76 companies. The company trades at 12.9x P/E which is 20% lower than 16.2x Specialty Chemicals industry avearge calculated based on 12 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Sudarshan Chemical Industries traded at 15.9x EV/(EBITDA-CAPEX) which is 304% higher than 3.9x Specialty Chemicals peer group avearge calculated on the basis of 8 companies.
Peers in Specialty Chemicals
Below we provide Sudarshan Chemical Industries benchmarking against other companies in Specialty Chemicals industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Black Rose Industries ($BLACKROSE) | | 30.6% | -5.6% | 70.0% | -10.0% |
| Kiri Industries ($KIRIINDUS) | 7.9% | -86.5% | 24.8% | 34.7% | |
| Vidhi Dyestuffs Manufacturing ($VIDHIDYE) | | 4.7% | 19.5% | 30.0% | -1.4% |
| Keltech Energies ($KELENRG) | | -13.4% | -0.4% | 24.4% | -6.3% |
| Dai-Ichi Karkaria ($DAICHI) | | 31.4% | 45.4% | 22.8% | -36.4% |
| |
|---|
| Median (29 companies) | 17.4% | 14.1% | 11.3% | 11.7% | -1.4% |
|---|
| Sudarshan Chemical Industries ($SUDARSCHEM) | | 9.1% | 28.2% | 8.3% | 15.3% |
Top companies by EBITDA margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Vinati Organics ($VINATIORGA) | 21.7% | 21.8% | 22.7% | 24.9% | 32.8% |
| Indian Toners & Developers ($INDTONER) | | | | 22.6% | |
| Solar Industries India ($SOLARINDS) | 18.5% | 17.5% | 17.9% | 19.3% | 19.3% |
| Anil ($ANILLTD) | 18.1% | 16.9% | 17.1% | 17.4% | 16.2% |
| Ultramarine & Pigments ($ULTRAMAR) | 18.0% | 15.5% | 17.4% | 17.2% | 17.2% |
| |
|---|
| Median (34 companies) | 9.4% | 11.2% | 10.6% | 10.6% | 15.9% |
|---|
| Sudarshan Chemical Industries ($SUDARSCHEM) | 10.6% | 8.9% | 11.9% | 10.7% | 12.0% |
Top companies by CAPEX/Revenue, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Plastiblends India ($PLASTIBLEN) | 2.1% | 1.9% | 0.9% | 4.0% | 15.6% |
| Camlin Fine Sciences ($CAMLINFIN) | 4.3% | 5.7% | 7.1% | 5.1% | 13.7% |
| Vinati Organics ($VINATIORGA) | 13.6% | 28.2% | 4.2% | 7.4% | 12.1% |
| Dai-Ichi Karkaria ($DAICHI) | 3.2% | | | 1.6% | 10.3% |
| Solar Industries India ($SOLARINDS) | 13.0% | 9.9% | 12.3% | 10.3% | 9.6% |
| |
|---|
| Median (14 companies) | 4.9% | 4.5% | 4.5% | 5.2% | 8.7% |
|---|
| Sudarshan Chemical Industries ($SUDARSCHEM) | 10.9% | 13.8% | 2.8% | 4.7% | 6.1% |
Top companies by ROIC, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Vinati Organics ($VINATIORGA) | 29.6% | 26.2% | 30.6% | 34.8% | 32.2% |
| Camlin Fine Sciences ($CAMLINFIN) | 11.1% | 17.8% | 24.2% | 29.5% | 23.3% |
| Pidilite Industries ($PIDILITIND) | 27.4% | 29.3% | 29.8% | 29.0% | 38.3% |
| Adi Finechem ($ADIFINCHM) | 30.6% | 29.8% | 46.4% | 26.3% | 20.6% |
| Ultramarine & Pigments ($ULTRAMAR) | 20.0% | 16.3% | 20.8% | 25.7% | 30.2% |
| |
|---|
| Median (37 companies) | 15.3% | 14.9% | 11.1% | 17.8% | 22.3% |
|---|
| Sudarshan Chemical Industries ($SUDARSCHEM) | 14.1% | 8.5% | 13.2% | 11.9% | 15.8% |
Top companies by Net Debt / EBITDA
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Kiri Industries ($KIRIINDUS) | 8.2x | 31.3x | 10.6x | 7.7x | |
| Jayant Agro-Organics ($JAYAGROGN) | 2.8x | 3.1x | 4.6x | 6.5x | 3.4x |
| Anil ($ANILLTD) | 2.2x | 3.4x | 3.8x | 4.0x | 4.2x |
| Oricon Enterprises ($ORICON) | 1.2x | 1.0x | 1.7x | 3.2x | |
| Meghmani Organics ($MEGH) | 4.2x | 3.7x | 4.3x | 3.1x | |
| |
|---|
| Median (32 companies) | 1.5x | 1.7x | 1.7x | 0.0x | 0.0x |
|---|
| Sudarshan Chemical Industries ($SUDARSCHEM) | 2.4x | 5.1x | 3.2x | 3.2x | 2.4x |
