DMCC Speciality

DMCC Speciality Chemicals reported a Q4 FY25 top line of INR 125 crores and a PAT of INR 6.47 crores. For the full financial year 2025, the company achieved a top line of INR 430 crores and a PAT of INR 21.5 crores. The full year EBITDA margin stood at approximately 13.5%. Management highlighted that the previous year's Q4 included an INR 8 crore pre-tax profit from investment sales, which should be considered when comparing year-on-year performance.

The company faced significant headwinds in European markets, experiencing a loss of export sales due to increased energy costs and reduced production by European chemical companies. In response, DMCC is actively exploring and developing new markets, making headway in Latin American countries and initiating sales into China. While these new markets have not yet fully compensated for the lost European business, management believes they will eventually substitute the demand, anticipating that European industry will eventually take steps to revive itself.

A key concern raised by management is the imminent commissioning of a large copper smelter in Kutch, expected within the next 3 to 6 months. This smelter will produce sulfuric acid as a byproduct, which is anticipated to create downward pressure on the sulfuric acid market, particularly in Northern Gujarat. This development could put sulfur-based sulfuric acid plants, like DMCC's, at a disadvantage when sulfur prices are high, as smelter-based production does not incur sulfur burning costs.

DMCC's Specialty Chemicals business is currently operating at 50-60% capacity utilization, generating an annual revenue of approximately INR 210 crores. Management stated that the company possesses sufficient reactor capacity to double its current sales in this segment, implying a potential annual revenue of around INR 420 crores. Future growth will focus on increasing utilization and, for mature products, transitioning them to dedicated plants with modest CAPEX of INR 10-15 crores.

The company's EBITDA margins in Q4 FY25 were impacted by an 'unusual jump' in sulfur prices. However, DMCC expects to pass on these raw material cost increases through contract pricing adjustments, with the effect anticipated to be reflected in Q1 FY26. The boron segment, which contributed about INR 100 crores in sales in the past year, comprises roughly 70% commodities and 30% higher-margin products, with specialty chemicals generally yielding better margins than bulk chemicals.

DMCC is not planning any major capital expenditure at this time, with only a modest plan of INR 10-15 crores for incremental investments or debottlenecking. The company's long-term borrowings have been reduced to below INR 60 crores, and its working capital position is described as comfortable. Annual maintenance CAPEX for sulfuric acid plants typically ranges from INR 1.5-2 crores every one to two years.