We maintain a BUY recommendation on with a target price of INR 800/share. We expect Sudarshan Chemical’s (SCIL) PAT to grow at a 32% CAGR over FY21-23E, led by a 20% CAGR in revenue. Two major global players shifting away from the pigment business could act as a tailwind for Indian pigment manufacturers. We believe SCIL is in a sweet spot to seize this opportunity by offering products similar to those of global players. 4Q EBITDA/APAT were 36/31% above our estimates, mainly due to a 27% higher revenue, lower-than-expected employee cost, offset by higher-than-expected tax outgo.

Financial performance: Revenue grew 14/28% QoQ/YoY to INR 5,765mn as company continues to see good traction in pigments segment on domestic & exports markets as also in all categories of product lines. Capacity utilisation during 4QFY21 was at ~86% of operating capacity. EBITDA was up 10/62% QoQ/YoY to INR 875mn. APAT grew by 36/96% QoQ/YoY to INR 534mn.

Pigment segment (92% of the revenue mix): Revenue/EBIT jumped 12/10% QoQ and 32/136% YoY to INR 5,326/650mn. EBIT margin for the segment came at 12.2% -16/+536bps QoQ/YoY.

Con call takeaways: (1) Exports accounted for 49% of revenues for the pigment segment. (2) Specialty pigments constituted 68% of the revenues for pigment segment in 4Q. The company's Capex is planned to build and concentrate on increasing specialty pigments in its mix. (3) It is about to finish its Capex plan of INR 6bn by spending INR 0.38bn in FY22. Sales from the total capex will ramp up gradually over 3-4 years. This capex has a revenue potential INR 10-12bn at full capacity. Over and above this, additional capex for FY22 is INR 1.35bn, which will be used to build infrastructure and conduct product trials. (4) Raw material price inflation is about 2-2.5%.