The stock of Sudarshan Chemicals jumped as high as 19 per cent in early deal to hit a 52-week high of ₹748.75 on Tuesday on the BSE, as its global competitor Heubach GmbH filed for bankruptcy in Germany. The local arm of Heubach GmbH — Heubach Colorants India — plunged as low as 18 per cent to ₹382.10.

However, Sudarshan Chemicals pared some gains to close at ₹717.50, up 14 per cent, while Heubach Colorants recovered some losses to end at ₹411.85, down 11.50 per cent.

Sudarshan is third largest pigments player globally after DIC and Heubach. “Heubach’s insolvency shall create a void in the interim period during which Sudarshan can strengthen its market presence across the exports market. Even if Heubach comes out of insolvency, Sudarshan can gain some irreversible market share. Sudarshan’s specialty portfolio is also strengthened in recent times with new products and validations/approvals thereof,” said Centrum Broking in a note.

Insolvency administrator

Heubach GmbH has filed an application for the opening of regular insolvency proceedings over its assets with the competent insolvency court in Braunschweig and, at the same time, applied for the jurisdiction of the Braunschweig insolvency court as the group court for the German subgroup of the Heubach Group. The court is expected to appoint an insolvency administrator to examine the possibility of continuing business operations and possible options for restructuring and/or selling the business in due course.

Sandeep Abhange, Research Analyst, LKP Securities, said Heubach GmbH, a Germany-based chemical company and the second-largest global pigments player filed for bankruptcy. Existing creditors provided a loan of around $70 million to the company to help it restructure its debt. On the back of this news, according to Abhange, Sudarshan Chemicals stands to gain meaningful market share in the export as well as domestic markets since it is currently the third largest global pigment player with newly commissioned capacities in FY23 with an industry-leading 35 per cent market share in the domestic market.

“We continue to believe that challenges like a) consolidation in the pigment industry,(Permanent shutdowns in capacities in Europe) b) high inflation in developed economies, c)weak geopolitical scenario, d)sharp volatility in commodity prices, and e) supply chain disruptions are expected to hit mid-sized and small pigment players resulting in benefit to major players like Sudarshan Chemicals. We maintain our positive stance on the company,” he added.

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