Sudarshan Chemical Industries Limited (NSE: SUDARSCHEM, BSE: 506655) reported a softer operating performance in the third quarter of FY26 as low demand across coatings and plastics weighed on volumes and margins, while integration with the acquired Heubach business progressed with early cost savings, according to the company’s Q3 FY26 investor presentation dated Feb. 13, 2026.
Market conditions weigh on Q3 performance
Management said demand across most pigment end-use industries remained subdued in Q3 FY26, particularly in coatings and plastics, due to high interest rates and weak macro conditions. Customers continued to carry elevated inventories following precautionary stocking during Heubach’s insolvency phase, which slowed destocking. Tariffs also impacted pricing and demand.
Q3 FY26 consolidated performance (One Sudarshan)
On a consolidated “One Sudarshan” basis, revenue from operations declined sequentially to ₹2,103 crore in Q3 FY26 from ₹2,387 crore in Q2 FY26, reflecting lower sales across both the legacy Sudarshan business and the acquired group.
Adjusted EBITDA for the quarter was ₹40 crore, compared with ₹116 crore in Q2 FY26, with EBITDA margin at about 1.9%. The acquired group reported an adjusted EBITDA loss of ₹38 crore, while legacy Sudarshan delivered ₹79 crore of adjusted EBITDA in the quarter. Profit before tax after exceptional items was a loss of ₹123 crore, impacted by weaker operating performance and the impact of India’s new labour code provisions.
Nine-month FY26 snapshot
For the nine months ended Dec. 31, 2025, consolidated revenue from operations stood at about ₹6,997 crore, compared with ₹5,045 crore in the year-ago period, reflecting the inclusion of the acquired business.
Adjusted EBITDA for 9M FY26 was ₹66 crore, with an EBITDA margin of about 1.3%. PBT after exceptional items stood at a loss of ₹157 crore. Legacy Sudarshan’s pigment sales were marginally lower year on year by 1.3%, mainly due to softness in Europe, North Latin America and the Middle East & Africa.
Pigments business: pricing, mix and destocking impact
A pigment-only deep dive showed that global pigment revenue declined sequentially in Q3 FY26 to ₹2,051 crore from ₹2,327 crore in Q2 FY26, reflecting lower volumes and pricing pressure at the acquired group. The acquired pigments business reported negative EBITDA margins, driven by weak demand, unfavorable mix and ongoing destocking at customers. Legacy Sudarshan’s pigment revenue was broadly stable year on year.
Integration progress and value capture
Integration with Heubach is progressing on multiple fronts. The company said SAP integration is underway, with a single integrated system landscape targeted by December 2026. A Global Capability Center (GCC) in Pune has been inaugurated, with gradual migration of applicable roles over the next 6–8 months.
On cost actions, management reported ₹40 crore of fixed-cost savings achieved by Q3 FY26 versus Q1 FY26 under the value capture plan. The company expects further benefits as organizational optimization and process harmonization continue.
Inventory actions and EBITDA reporting
Management distinguished between business EBITDA and reported EBITDA, noting that plans to reduce finished goods inventory by €30–40 million over the next three quarters will support operating cash flows and working capital reduction but may temporarily depress reported EBITDA due to absorption effects. The company expects normalization over time as inventory levels stabilize.
Outlook
The company said customer trust is gradually returning, with signs of renewed buying from global accounts in January and early February. Destocking pressures on legacy Heubach products are easing, and integration milestones across systems, culture and customer service are progressing. Management expects value capture initiatives to support margin recovery and working-capital improvements as market conditions stabilize.
Summary
Sudarshan Chemical’s Q3 FY26 performance reflected weak pigment demand, pricing pressure and customer destocking, resulting in a sharp sequential decline in EBITDA. Integration with Heubach continued to advance, with early fixed-cost savings and operational harmonization underway. Management expects gradual demand normalization, easing destocking and continued value capture to support margin recovery over the coming quarters.