DCM Shriram Q3 FY26 earnings call

DCM Shriram reported a consolidated revenue of ₹3,811 crores for Q3 FY26, marking a 13% year-on-year increase from ₹3,367 crores in Q3 FY25. PBDIT for the quarter stood at ₹560 crores, up 4% from ₹537 crores in the prior year. Profit after tax was ₹213 crores, after accounting for an exceptional item^📎 of ₹55 crores related to new labour codes. For the nine months ended December 31, 2025, revenues were ₹10,345 crores (up 12% YoY) and PBDIT was ₹1,294 crores (up 24% YoY).

The Chemicals business saw a robust 30% year-on-year increase in revenue, primarily driven by a 6% rise in Caustic soda volumes due to better capacity utilization. New projects like Hydrogen Peroxide, Aluminium Chloride, Refined Glycerine, and Epoxy also contributed to revenue growth. However, PBDIT for the segment declined by 8% year-on-year, attributed to higher fixed costs and stabilization expenses for new plants, partially offset by lower input prices. Chlorine prices remained under pressure, impacting overall segment profitability.

The Vinyl (PVC) segment experienced a 13% year-on-year decline in revenues due to lower volumes and subdued prices of both PVC and Carbide. PBDIT for the segment was ₹19 crores, down from ₹29 crores in the previous year. The domestic market continues to face challenges from abundant imports and global oversupply. Despite a recommendation for anti-dumping duties, the Ministry of Finance chose not to impose them, leading to a sharp fall in domestic PVC prices. Management is actively pursuing the implementation of Minimum Import Price (MIP) and Quality Control Orders (QCOs) with the government to address these issues.

The Sugar & Ethanol business reported a 15% year-on-year increase in revenue. Domestic sugar volumes grew by 8% and ethanol volumes by 10%, while sugar prices increased by 7%. PBDIT for the segment surged to ₹204 crores from ₹112 crores last year, significantly boosted by a ₹36 crore reversal of a provision related to retrospective levy of duty on ethanol exports. Despite a 3% decline in ethanol prices due to sales mix, the segment demonstrated strong operational performance. Management is advocating for an increase in sugar MSP and higher blending targets to ensure mill viability.

Fenesta Building Systems continued its healthy volume growth, with revenues increasing 28% year-on-year, primarily led by the project vertical. However, PBDIT for the quarter was ₹35 crores, down from ₹43 crores last year. This margin normalization is attributed to shifts in the product mix, with the growing facade business having lower initial margins, and higher fixed costs from investments in new revenue platforms and brand presence. Management expects margins to stabilize and improve towards 14% as volumes grow and cost efficiencies are realized over the next 6 months.

The Epichlorohydrin (ECH) plant, a new venture, was commissioned in October 2025, with two-thirds of its capacity now operational and undergoing stabilization. The remaining balance capacity is expected to be commissioned by the end of Q4 FY26, with efficiency issues targeted for resolution by then, aiming for profitability in coming quarters. The aluminium extrusion project at Kota is also on schedule, with phase one slated for commissioning by the end of the next quarter. These projects are part of the company's significant investments of ₹4,000-5,000 crores over the last 3-4 years.

The company's net debt stood at ₹1,084 crores as of December 31, 2025, an increase from ₹867 crores a year prior, primarily due to capital expenditure and acquisitions. The Board announced an interim dividend of 180% (₹56.14 crores), bringing the total dividend for the year to 360% (₹112.28 crores). The acquisition of Hindusthan Speciality Chemicals in August 2025 is progressing well, with the entity expected to near breakeven or better by the end of 12 months. The demerger of consumer-facing products is in advanced stages, with completion targeted within the next 3-4 months, aiming to enhance agility and unlock value.