Sudarshan Chemical Industries released its Q3 FY26 investor presentation detailing performance across legacy Sudarshan and the acquired group. The company noted continued low demand due to market softness and high customer inventory levels. Integration priorities, including SAP harmonization and the establishment of the Global Capability Center (GCC), are progressing well. The outlook suggests the worst is past, with signs of recovery and easing destocking in early 2026, supported by value capture efforts targeting ~€40 million in savings.
Q3 FY26 Investor Call and Key Announcements
Sudarshan Chemical Industries formally announced its Q3 FY26 results via an Investor Presentation, shared on February 13, 2026. The presentation confirmed the ongoing strategic integration between Sudarshan and Heubach, positioning them as a combined global, value-creating pigment leader. The unification leverages Heubach’s legacy (over 200 years) and Sudarshan’s established profitable growth, creating a combined entity with an annual turnover approaching €1 billion and over 1,600 pigment products.
Market Reflections and Performance Headwinds
The third quarter was characterized by persistent market challenges. Observations included low demand across most pigment end-use industries, particularly coatings and plastics, driven by high interest rates. A key factor affecting the acquired group was continued high stock levels held by customers who over-purchased during the prior insolvency phase. Furthermore, tariffs posed ongoing challenges.
Consolidated Performance Summary (In ₹ Cr)
The consolidated results showed a year-over-year revenue decline. For Q3 FY26, One Sudarshan Revenue from Operations stood at 2,103 Cr, down from 2,387 Cr in Q2 FY26. Adjusted EBITDA for the combined entity was 40 Cr (1.9% margin) in Q3 FY26, compared to 116 Cr in the preceding quarter.
- Legacy Sudarshan Pigment: YoY sales were marginally lower by 1.3%, with Adjusted EBITDA% remaining strong at 13.3% in Q3 FY26.
- Acquired Group (Pigment): The EBITDA loss of -38 Cr in Q3 FY26 was primarily driven by a significant drop in sales volumes, mix, and pricing effects due to ongoing soft demand and destocking.
The 9M FY26 performance for the combined Pigment Global business showed revenue of 6,835 Cr, with Adjusted EBITDA% dropping to 4.6%.
RIECO Performance Snapshot
The RIECO segment experienced a revenue drop to 51 Cr in Q3 26 (from 60 Cr in Q2 26), resulting in an EBITDA of -2.6 Cr. This drop was attributed to the shifting of revenue to Q4 due to site readiness.
Integration and Value Capture Update
Management confirmed substantial progress against Year 1 priorities:
- Value Capture: The company achieved 40 INR Cr in fixed cost savings in Q3 versus Q1 FY26.
- Organization: The Global Capability Center (GCC) in Pune has been inaugurated, with jobs gradually shifting over the next 6-8 months.
- Systems: SAP integration (moving from 4 to one integrated system) is well underway, expected to be fully harmonized by December 2026.
- Culture: Over 90% of colleagues aligned with the new purpose, mission, and values.
Business vs. Accounting EBITDA Deep Dive
A focus area is managing inventory impact. The company targets reducing finished goods inventory by ~€30-40 Mn over the next three quarters. This strategy is business positive, as it improves operating cash flow and strengthens the balance sheet (reducing net debt), although it is expected to cause a temporary reduction in Reported EBITDA.
The expected Business EBITDA impact from this inventory normalization is ~€9-10 Mn.
Acquired Group EBITDA Projection
The acquired group achieved €6.5 Mn EBITDA in 9M FY26. The revised full-year EBITDA outlook is ~€16 Mn. Management projects a strong recovery, expecting FY 28/29 EBITDA to reach between 90-100 Mn €.
Positive Forward-Looking Statements
Sudarshan believes it has left the worst behind in the chemicals industry. Key positive indicators include the easing of the destocking situation, with global accounts resuming buying in January and early February. Integration efforts and value capture work are expected to continue driving profit and working capital improvements.
Source: BSE
