This Vijay Kedia chemical stock declines around 9% intraday on weak Q1 performance – Brokerages say this

Vijay Kedia stock, Sudarshan Chemical: Ace investor Vijay Kedia-backed chemical company – Sudarshan Chemical Industries shares plunged nearly 9 per cent to Rs 442.05 per share on the BSE intraday during Monday’s trading session after the company reported weak numbers in the first quarter of the financial year 2022-23 (Q1FY23).

Renowned investor Vijay Kedia holds 10,00,000 equity shares, which translates into a 1.4 per cent stake in Sudarshan Chemical, as per the latest BSE shareholding pattern of the company. 

Kedia holds around 15 stocks in his portfolio with a net worth of Rs 417.8 crore as of August 8, 2022, according to stock analysis website trendlyne.com.

The small-cap company’s net profit slipped by 73 per cent to Rs 7.1 crore in June-end quarter of FY23 as against Rs 26.2 crore in a year-ago quarter. While revenue surged by 16.7 per cent to Rs 549.7 crore as compared to Rs 471 crore in Q1FY22.

The company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) slumped by 27.5 per cent to Rs 36.9 crore versus Rs 59.1 crore year-on-year. And, margins tumbled to 6.7 per cent from 12.6 pr cent YoY.

The China+1 story is not new to the specialty chemical industry and has been in place since 2016 when the Chinese government initiated a series of shutdowns on the chemical factories in their country due to environmental concerns, domestic brokerage firm Motilal Oswal said in a report.

China Plus One, also known simply as Plus One, is the business strategy to avoid investing only in China and diversify business into other countries.

This has led to increased confidence of global customers demanding more from the Indian manufacturers, which in turn has led to a never-seen-before capex cycle in the Indian Chemical industry in the past six years, the brokerage report further added.

The company is hopeful of consistent growth in new products and HPP (high purity products), which will be further aided by industry consolidation, similarly, it is also mindful of net debt, and the focus now will be to ramp up capacities in FY24 and deleverage the balance sheet, ICICI Securities said  

At around 11:17 AM, the chemical stock is down almost 6 per cent to Rs 457.6 per share on the BSE as against 0.45 per cent rise in the S&P BSE Sensex at the same time.