At a Glance
Asahi Songwon Colors – the pigment king with a love for CPC Blue – just dropped its Q1 FY26 numbers, and they’re not exactly a masterpiece. Revenue stood at ₹149.9 Cr, down 11.6% YoY, and PAT plunged 40.7% to ₹2.6 Cr. Margins? A sad 7%. The stock tanked 5% because, surprise, investors don’t enjoy holding a paint can that’s losing gloss. With a P/E of 32, low ROE (6.9%), and global pigment demand playing hide-and-seek, the future is more “fifty shades of uncertainty” than vibrant growth.
1. Introduction
Asahi Songwon has long been the Picasso of pigment manufacturing, but recent years have been more abstract than profitable. From being the world’s largest producer of CPC Blue crude, it diversified into AZO pigments and even APIs. Sadly, the markets yawned.
FY25 was a bounce-back year with some recovery, but Q1 FY26 reminded everyone why chemical businesses live on the edge: volatile raw material costs, currency swings, and demand dips. Investors expecting a colorful rally instead got a water-stained chart.
2. Business Model (WTF Do They Even Do?)
The company manufactures pigments that color everything from inks to textiles.
- Phthalocyanine Pigments: Its bread and butter, with global leadership in CPC Blue.
- AZO Pigments: Yellow, red, and orange – basically the rest of the rainbow.
- APIs: New kid on the block, but still learning to walk.
Their strength is backward integration in CPC Blue, giving cost control. Their weakness? Demand cyclicality and low pricing power.
3. Financials Overview
Q1 FY26 snapshot:
- Revenue: ₹149.9 Cr (-12% YoY)
- EBITDA: ₹10.5 Cr (margin 7%)
- PAT: ₹2.6 Cr (-41% YoY)
- EPS: ₹2.68
Annual FY25 revenue was ₹562 Cr (+32%), but PAT was just ₹17 Cr. Margins improved last year, but Q1’s drop is a red flag.
4. Valuation
Valuation looks okay on paper but shaky in reality:
- P/E Method: EPS ₹15 × sector multiple 20 → ₹300
- EV/EBITDA: EBITDA ₹53 Cr × 8 → EV ₹424 Cr → ₹360/share
- DCF: Assuming slow growth 8%, discount at 12% → ₹280
Fair Value Range: ₹280 – ₹360
CMP ₹419 = premium for a company with flat growth.
5. What’s Cooking – News, Triggers, Drama
- API foray: Could be a game-changer if executed well.
- Export markets: Currency volatility hurts.
- Raw material costs: Spike = margin death.
- Colorants demand: Global slowdown is not helping.
6. Balance Sheet
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Assets | 545 | 570 | 590 |
| Liabilities | 147 | 138 | 168 |
| Net Worth | 219 | 224 | 243 |
| Borrowings | 180 | 197 | 167 |
Auditor’s Roast: Debt is down, but net worth growth is slower than drying paint.
7. Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating | 30 | 9 | 58 |
| Investing | -77 | -13 | -5 |
| Financing | 47 | 4 | -49 |
Commentary: Ops cash finally positive in FY25, but financing shows debt repayments. Not terrible, not great.
8. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE | -0.2% | 7% | 6.9% |
| ROCE | 1% | 9% | 9% |
| P/E | 29 | 33 | 32 |
| PAT Margin | -3% | 3% | 3% |
| D/E | 0.8 | 0.9 | 0.7 |
Verdict: Ratios still stressed. Needs a makeover.
9. P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 505 | 426 | 562 |
| EBITDA | 5 | 18 | 56 |
| PAT | -18 | 16 | 17 |
Commentary: Turned profitable, but profits still microscopic.
10. Peer Comparison
| Company | Rev (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Sudarshan Chem | 3,346 | 72 | 153 |
| Heubach Colorant | 825 | 58 | 23 |
| Ultramarine Pig. | 719 | 79 | 20 |
| Asahi Songwon | 578 | 15 | 32 |
Commentary: Lower revenue, lower profit, yet higher P/E than peers like Heubach. Huh?
11. Miscellaneous – Shareholding, Promoters
- Promoters: 66.8% (steady)
- FIIs: 0% (they don’t like colors?)
- DIIs: 0%
- Public: 33.2%
Promoters steady, institutions missing in action – tells you something.
12. EduInvesting Verdict™
Asahi Songwon is a global pigment player with world-class CPC Blue production. But the financials are anything but vibrant. Margins are weak, PAT is tiny, and the company hasn’t fully convinced the market about its API and AZO pigment ventures.
SWOT Snapshot:
- Strengths: Global leader in CPC Blue, backward integration.
- Weaknesses: Low ROE, small profits, demand cyclicality.
- Opportunities: API vertical, new pigments, export potential.
- Threats: Raw material volatility, competition, global slowdown.
Bottom line – the company may paint the town blue, but investors should check if the paint is waterproof.
Written by EduInvesting Team | 29 July 2025
SEO Tags: Asahi Songwon Colors, Pigments Industry, Q1 FY26 Results, Stock Analysis
