Sudarshan Chemical soars 23% in 3 days after Axis MF buys stake in company

Shares of Sudarshan Chemical Industries edged higher by 18 per cent to Rs 698 on the BSE in intra-day trade on Friday, up 23 per cent in the past three trading days, after Axis Mutual Fund bought nearly 1 per cent stake in the company via the open market.

On August 24, 2021, Axis Mutual Fund A/c Axis Smallcap Fund purchased 589,498 equity shares, representing a 0.85 per cent stake of Sudarshan Chemical at a price of Rs 565 per share on the BSE, the exchange data shows.

Rahul Pradeep Rathi, one of the promoters of the company, sold 980,681 equity shares or 1.42 per cent holding in the company at a price of Rs 565.04 per share, data shows. The names of the other buyers were not ascertained immediately.

Sudarshan Chemical Industries is a chemical company mainly engaged in the manufacture of organic, inorganic and effect pigments for different applications. The company is a market leader in the pigment manufacturing business in India and also commands a significant global presence. The international locations where business activity is undertaken are the USA, Europe, China, Mexico and Japan.

In terms of expansion, the company said it progressed well on capex projects. Overall, Rs 600 crore of capex plans were initiated in FY20, and the management is confident that the company will fully implement the same by FY22.

"Multiple projects which are now in the final stage of implementation are likely to soon get commercialised. Post this capex, the company will have a product portfolio equivalent to that of global leaders. Despite pursuing our growth aspirations and with a large capex under implementation, we have effectively maintained and improved our financial metrics and key ratios,” Sudarshan Chemical said in the FY21 annual report.

Two major global players shifting away from the pigment business could act as a tailwind for Indian pigment manufacturers, HDFC Securities said in a stock update. It believes Sudarshan Chemical is in a sweet spot to seize this opportunity by offering products similar to those of global players.