Shiv Texchem — Q4 FY25 earnings call

Call held 6 Jun 2025

Management summary

Shiv Texchem reported a strong H2 and FY25, with significant revenue and profit growth driven by both existing products and new SKU additions. EBITDA margins expanded to 4.4% in H2, exceeding expectations. While management emphasized sustainable growth in niche chemicals, concerns were raised regarding increased receivable days and the need for a potential fundraise to support future expansion.

Highlights

  • H2 revenue growth of 14-15% over H1, demonstrating strong operational performance.

  • H2 PAT growth of 35% and PBT growth of 40-50% over H1, indicating robust profitability.

  • H2 EBITDA margins at 4.4% surpassed management's expectation of 4.25%, reflecting improved efficiency.

  • FY25 saw significant revenue growth of 40-45% and EBITDA growth of over 50% compared to FY24, with EBITDA margins maintained above 4%.

  • Management highlighted a focus on sustainable growth through diversification into niche, specialized chemicals and continuous addition of new SKUs, targeting 75-80 products in 3-5 years.

Concerns

  • Receivable days increased from 40-43 days to 70-75 days, raising questions about working capital efficiency.

  • A potential fundraise is under internal discussion to support future growth, suggesting current internal accruals might not fully cover expansion needs.

  • Analysts raised concerns about the sustainability of growth in niche products and the risk of customers bypassing Shiv Texchem for direct sourcing as volumes increase.

Key financials

5 periods

Headline

  • Receivable Days
    70 days

H2

  • EBITDA Margin
    4.4%

FY25

  • EBITDA Margin
    4%
  • PAT Margin
    1.9%

vs FY24

  • FY25 Revenue Growth
    40%
  • FY25 EBITDA Growth
    50%

vs H1

  • H2 Revenue Growth
    14%
  • H2 PAT Growth
    35%
  • H2 PBT Growth
    40%

What they filed

Q4 FY26: revenue up 38.1%, net profit up 84.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue613 922 1,031 1,171 1,503 +145%1,273 +38%
EBITDA23 35 35 51 73 +217%63 +80%
Net profit11 19 21 27 43 +291%35 +84%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Revenue

  • Revenue Growth CAGR Revenue · going forward · High confidence 40-45%
    So, if I have to put at it, think a CAGR of between 40%, 45% going forward is something that we would look to sustainably have.

    — Hemanshu Chokhani

Margin

  • EBITDA Margin Margin · going forward · High confidence >4%
    EBITDA margins have expanded, right? So, we are well above 4% and hopefully we can sustain this going forward.

    — Vikas Pavankumar

  • PAT Margin Margin · going forward · High confidence 1.9-2.2%
    Our PAT margins have gone up from 1.9 to about 2.2. Going forward, caution you had about forward-looking, but we do expect this growth to sustain

    — Vikas Pavankumar

Product Portfolio

  • Number of SKUs Product Portfolio · next 3-5 financial years · Medium confidence 75-80 products

    From 40+ products today

    We hope and pray to reach say 75 - 80 products in the next 3 - 5 financial years.

    — Hemanshu Chokhani

What to watch in Q1 FY26

Fundraise Plan Announcement

next quarter
Current Under internal discussion
Target Announcement of specific fundraise plan (amount, type, timeline)

Why it matters

Will indicate the company's capital needs and strategy for funding future growth and expansion.

So, sir, we are still internally discussing this with the board and the committees. So, on that one, we'll get back to you as and when we do plan that.

Risks & concerns

  • Increased Receivable Days

    medium

    Receivable days increased from 40-43 to 70-75 days, though management states debtors are highly rated and it's a rebalancing of working capital cycles.

    Analyst acknowledged

  • Customer Disintermediation for Niche Products

    medium

    Risk of customers bypassing Shiv Texchem for direct sourcing as their volumes of niche products grow, potentially impacting future growth.

    Analyst acknowledged

  • Need for Fundraise to Support Growth

    low

    A potential fundraise is under internal discussion to support future growth, indicating that current internal accruals might not be sufficient for aggressive expansion plans.

    Analyst acknowledged

Q&A highlights

7 direct, 1 evasive
Business Model, Addressable Market, and Growth Scope Direct
the amount of petrochemicals imported in the country would be well into $20, $30 billion. And I'm just speaking about liquid petrochemicals, but for us focusing on highly niche specific chemicals, it already the addressable market is very large and the pie itself is expected to enhance. And we do not see the focus of any domestic sort of production coming in to fulfill these needs.

Clarifies the company's market positioning and long-term growth rationale in a niche, specialized chemical segment.

Asked by Nikhil Chandak

Competitive Advantage (USP) and Entry Barriers Direct
we have a certain proprietary models which we develop, which give us, which give them an outlook on what would be indicative pricing for the multiple SKUs that we have to offer. ... We live in a VUCA world; Where there's volatility, there is a difficulty in procurement, understanding lead times, shipping lanes, giving them satellite imagery and satellite tracking of vessels when they have bought cargoes from us. Storing it in tanks, right, now these tankages are not easy.

Explains the company's competitive moat through value-added services like advisory, supply chain visibility, and specialized storage, rather than just trading.

Asked by Rashid Khan

Working Capital Management and Receivable Days Direct
our receivable days have gone from 40, 43 days to around 70, 75 days. So, what exactly are we not able to negotiate with our suppliers or what is driving this increase in receivable days? ... it's rebalancing of our working capital cycles that I just mentioned. Our inventory days have gone down.

Addresses a potential red flag regarding cash flow and asset quality, with management explaining it as a rebalancing and noting highly-rated debtors.

Asked by Ashutosh Nemani

Revenue Growth Drivers (New Products vs. Volume) Direct
the existing products also provide growth, but it is the infusion of new SKUs, which is the constant endeavor of the company, which is also providing growth. At the last point, we also sow seeds every year that give us the tasty Alfonzo mangoes that come in the summers of the next financial year.

Clarifies the strategy for sustaining high growth rates through a combination of organic expansion in existing products and continuous diversification into new product offerings.

Asked by Ashutosh Nemani

Fundraise Plan Evasive
So, sir, we are still internally discussing this with the board and the committees. So, on that one, we'll get back to you as and when we do plan that.

Indicates potential future capital needs or strategic moves, but without concrete details, leaving investors awaiting further announcements.

Asked by Neel Paresh Doshi

Business Model Transparency Direct
when we deal with customers, right, we are distributing highly specialized product. Many of our agreements are tripartite. So, there is no scope for us to be, this opaqueness, opacity really hurts the system. Everyone has to be in sync.

Addresses a potential concern about the integrity of the supply chain model, emphasizing transparency and collaborative relationships with customers and suppliers.

Asked by Avinendra Singh

Niche Product Growth and Customer Direct Sourcing Risk Direct
I think you're, so don't take niche when I say niche in its literal sense. When I say niche, the way you need to understand what niche means is that if you see their overall spend on raw material, so how much are you contributing on the overall spend of that particular entity? Now, as I said earlier, our focus has been on the longer tail, which is your last 25%-30% of the overall spend of the entity.

Addresses a core challenge of the niche distribution model, explaining how the company mitigates the risk of disintermediation by focusing on smaller, aggregated volumes.

Asked by Nikhil Chandak

Funding for Working Capital and Growth Direct
If my revenue has to increase at a certain pace, there has to be growth in my current assets.

Provides context for the earlier mention of a potential fundraise, linking it directly to the working capital requirements necessary to support revenue growth in an asset-light business model.

Asked by Nikhil Chandak

2 min read 5 chapters

Detailed narrative

Strong H2 & FY25 Financial Performance

Shiv Texchem delivered a robust performance in H2 FY25, with revenue growing 14-15% over H1, PAT increasing by 35%, and PBT by 40-50%. The company's EBITDA margins reached 4.4% in H2, exceeding its internal expectation of 4.25%. For the full fiscal year FY25, revenue grew significantly by 40-45% compared to FY24, accompanied by an EBITDA growth of over 50% and sustained EBITDA margins above 4%. PAT margins for FY25 also expanded from 1.9% to 2.2%.

Niche Chemical Distribution Model and Competitive Moat

The company operates in the niche chemical distribution space, addressing India's reliance on imported petrochemicals, a market estimated at $20-30 billion. Shiv Texchem differentiates itself through proprietary models for indicative pricing, real-time supply chain visibility, and specialized storage facilities for hazardous materials. Management emphasized that their focus on highly niche and specialized chemicals, where domestic production is limited, provides a sustainable growth runway and acts as a significant entry barrier for competitors.

Growth Drivers and Product Portfolio Expansion

Shiv Texchem's growth is driven by a dual strategy: continued expansion of existing product volumes and the constant addition of new, specialized SKUs. The company has grown its product portfolio from 5-10 products to over 40 and aims to reach 75-80 products within the next 3-5 financial years. This diversification strategy, particularly into high-value-added niche products, is expected to enhance margins and strengthen market position, with identified growth pockets in specialty polymers, renewables, EV, electronics, and agrochemicals.

Working Capital Dynamics and Management

A key discussion point was the increase in receivable days from 40-43 to 70-75 days. Management clarified this as a 'rebalancing of working capital cycles,' noting that inventory days have simultaneously dropped. They assured that most debtors are highly rated (CRISIL A and above), mitigating credit risk. Despite being an asset-light distribution business, management acknowledged that sustained revenue growth necessitates an increase in working capital, which is a function of current assets.

Future Outlook and Strategic Focus

The company projects a sustainable revenue growth CAGR of 40-45% going forward, with expectations for steady, trickling increases in EBITDA margins driven by benefits of scale and a richer product mix. Management reiterated its commitment to responsible, sustainable growth, avoiding lopsided exposure to any single product family or customer. A potential fundraise is currently under internal discussion to support future growth, with details to be disclosed upon finalization.

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