DMCC Speciality Chemicals Limited — Q4 FY26 earnings call

Call held 19 May 2026

Management summary

DMCC Speciality reported strong Q4 FY26 revenue growth driven by raw material price pass-through, ending FY26 with a record top line. The company navigated significant sulfur supply disruptions from the Middle East crisis and boron ore issues, maintaining absolute margins. Working capital expanded due to higher raw material costs, leading to increased borrowings. DMCC successfully diversified its market reach, offsetting European market struggles.

Highlights

  • Revenue grew by 18% QoQ to INR 177 crores in Q4 FY26.

  • Achieved INR 582 crores in revenue for FY26, a company high.

  • Maintained absolute margins despite turbulent supply chain and raw material price increases.

  • Successfully diversified market presence, replacing lost European business with Latin America, Japan, Korea, and China.

  • Boron chemicals plants are now operating at full capacity with adequate stock after prior disruptions.

Concerns

  • Roha plant operated at 60% capacity for about 15 days in March due to sulfur availability challenges.

  • Working capital requirements expanded substantially, leading to increased short-term borrowings.

  • Interest cost moved up sharply, with rates in the 8.75%-9% range.

  • Demand for non-boric acid products (ceramics, glass) is down due to high energy (gas) prices, creating a bearish sentiment.

Key financials

  1. Revenue ₹177 Cr +18%QoQ
  2. Annual Revenue ₹582 Cr

What they filed

Q1 FY27: revenue up 99.2%, net profit up 150.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue103 118 125 127 126 +22%151 +28%178 +42%253 +99%
EBITDA15 18 15 17 14 −7%15 −17%18 +20%34 +100%
Net profit6 8 6 8 6 +0%6 −25%8 +33%20 +150%
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.

Capital allocation

high confidence
  • Debt Debt disclosed Cost 8.8%
    So, it's about 9%, 8.75% to 9% in that range is the percentage of interest. It's not a question of borrowing at a high rate. It's a question of the absolute amount has gone up.
  • Liquidity Liquidity disclosed Working capital requirements expanded due to higher raw material prices, higher debtor requirements, and increased stock value. Overall working capital to sales is less than two months, which is within industry norms.
    Finance wise, we also needed to expand our working capital requirement substantially. First of all, for the Boron business, which went from a situation of where we were getting credit and picking up material from stocks in India to a position where we had to pay advance and got material 90 days to 120 days after paying the advance. So again, that blocks more money. And on top of that, the Sulfur price increase results in a higher debtor requirement, higher stock value requirement and therefore overall working capital has gone up. Which is why you will see the short-term borrowings expanding substantially. Overall, we are still at a very healthy percentage of working capital to sales. I think less than two months overall, which is well within the industry norms.

What to watch in Q1 FY27

R&D Spend Increase

coming quarters
Current No more than INR 2 crores annually
Target Increased R&D spend

Why it matters

Increased R&D is crucial for DMCC to develop new specialty products and enhance its position as a 'true specialty player'.

Most of our R&D is focused on process development and process improvements. The cost you are seeing is essentially like a people cost. But we do have some plans for increasing this, and you will see that in the coming quarters.

Risks & concerns

  • Middle East Crisis Impact on Sulfur Supply

    high

    The Middle East crisis has affected sulfur availability and price, with 50% of global sulfur trade flowing through the Gulf of Hormuz, leading to supply disruptions and price increases.

    Management acknowledged

  • Sulfur Price Volatility and Availability

    high

    Sulfur prices have been rising dramatically due to increased demand (e.g., from new nickel smelter in Indonesia) and war-related availability issues, leading to plant slowdowns at Roha.

    Management acknowledged

  • Delayed Normalization of Supply Chains

    high

    Even if the Middle East conflict resolves, the damage and disruption to supply chains will take several months to normalize, impacting raw material availability.

    Management acknowledged

  • Boron Ore Supply Disruption

    medium

    Disruption in boron ore supply from Turkey in H1 FY26 led to significant production loss, though the situation is now normalized with adequate stock.

    Management resolved

  • Expanded Working Capital Requirements

    medium

    Higher raw material prices and longer payment cycles for boron business have substantially increased working capital requirements, leading to higher short-term borrowings and interest costs.

    Management acknowledged

  • European Market Weakness for Specialty Chemicals

    medium

    The specialty chemical business has reduced in Europe, though the company has diversified into other markets.

    Management acknowledged

  • High Gas Prices Impacting Non-Boric Product Demand

    medium

    High CNG/natural gas prices affect consuming industries like ceramics and glass, leading to reduced demand, oversupply, and bearish market sentiment for non-boric products.

    Management acknowledged

  • Customer Inability to Absorb Price Increases

    medium

    There is a potential future risk that some customers may not be able to absorb continued price increases for products, which could impact consumption.

    Management acknowledged

Q&A highlights

6 direct
Roha Plant Sulfur Availability Disruption Direct
So, the Roha plant essentially was affected in the month of March only. So, we didn't shut down the plant as such, but we slowed down the plant to about 60% capacity and just to ensure that we didn't need to shut down. It took us a while to organize sufficient raw material. The reason for this is that in Dahej, we are able to source enough sulfur domestically. In Roha, the plant is typically far away from the refineries and therefore, we need to have imports on a normal basis. Of course, currently, imports are not available. So, it took us a while to organize the supply chain. And now, it's again back to normal as I mentioned, but for maybe 15 days, we ran at perhaps 60% capacity.

Clarifies the extent and duration of the operational disruption at the Roha plant due to raw material sourcing issues.

Asked by Arham Gandhi

Non-Boric Acid Business Demand & Pricing Direct
So, in terms of the non-boric products, which are things like ceramics, glass, all that, they depend a lot on energy in the form of gas. So, CNG or natural gas is the main source of fuel... So, what happened is that they stopped consuming whatever raw materials they had, they were selling into the market. And this resulted again in disruption in the market in terms of pricing and oversupply in terms of volume... And until the gas situation becomes normal, the demand will not come back.

Explains the impact of high energy prices on demand for non-boric acid products and the resulting market oversupply.

Asked by Arham Gandhi

Working Capital Expansion and Interest Cost Direct
So, it's about 9%, 8.75% to 9% in that range is the percentage of interest. It's not a question of borrowing at a high rate. It's a question of the absolute amount has gone up. And that's sort of in line with our top line number one and also in line with the increase in the stock value.

Provides specific interest rate range and clarifies that increased working capital is due to higher stock/debtor values, not higher borrowing rates.

Asked by Arham Gandhi

Latin American Market Entry and Specialty Pricing Dynamics Direct
We have been able to replace most of the European business with business in Latin America. And we are also looking at, as I mentioned, Japan, Korea, and China... what I am supplying in April, May, June is a price I would have negotiated in January. And if there is a sharp increase, temporarily I will see a lower realization. But all these are long-term customers. And in the next quarter, I will recover what was there. So, overall, as the price averages out, you average out the margins as well.

Confirms successful market diversification and explains the lag in passing on raw material cost increases for specialty chemicals due to contract structures.

Asked by Arham Gandhi

Nalimbi Land Monetization Status Partial
So, that is not at Ambernath. It is near Ambernath, a place called Nalimbi. It was land which was declared as forest land. And then recently there was a Supreme Court verdict in our favor... The Maharashtra government has still not transferred the land back to our name in spite of the court order. So, we are not able to monetize it as yet. We are looking at options for that though.

Provides an update on the legal and administrative hurdles preventing the monetization of a land parcel, which could be a source of funds.

Asked by Arham Gandhi

DMCC's Identity as a Specialty Chemicals Company Direct
when we did the name change, we were about 30% in terms of commodities and about 60% to 70% in terms of the bulk chemicals. What has happened since then is we made the investment in Dahej to expand our footprint and our manufacturing capability. The price of the raw materials has gone up substantially and the price of the sulfuric acid has therefore also gone up. Our volumes have also expanded in sulfuric acid because of the investment at Dahej. This has sort of correlated with a drop in the European market which was entirely speciality chemicals. So that's the reason you're not yet seeing the numbers which we would like to have going back to say 30%-40% of bulk and about 60% of specialties.

Addresses the perceived discrepancy between the company's name and its current product mix, explaining the shift towards bulk chemicals due to market dynamics and investments.

Asked by Sajal Kapoor

R&D Intensity and Future Plans Direct
Most of our R&D is focused on process development and process improvements. The cost you are seeing is essentially like a people cost. But we do have some plans for increasing this, and you will see that in the coming quarters.

Acknowledges the low R&D spend and indicates future plans to increase it, which is crucial for a specialty chemicals company.

Asked by Sajal Kapoor

Sulfur Inventory Details Partial
Sulfur inventory is normally not more than 15-20 days at each location. So, it's about 1,500 tons at each location. I couldn't tell you exactly what is the price we bought it and what is the price now. I think that's not relevant to this kind of discussion. But just to say that about 15 days is the maximum inventory we would keep.

Provides insight into the company's sulfur inventory management strategy and typical stock levels, though specific pricing details were not disclosed.

Asked by Tanmay

3 min read 7 chapters

Detailed narrative

Q4 & FY26 Financial Performance Overview

DMCC Speciality reported a strong Q4 FY26 with revenue increasing to INR 177 crores, up from INR 150 crores in the previous quarter, representing an 18% sequential growth. For the full financial year 2026, the company achieved a top line of INR 582 crores, marking one of its highest annual revenues. This growth was largely attributed to the ability to pass on higher raw material prices to customers, allowing the company to maintain absolute margins despite percentage margin compression.

Impact of Middle East Crisis on Sulfur Supply

The Middle East crisis significantly impacted sulfur availability and pricing, with approximately 50% of global sulfur trade flowing through the Gulf of Hormuz. This disruption led to dramatic price increases and availability shortages. The company's Roha plant experienced a slowdown to about 60% capacity for roughly 15 days in March due to challenges in sourcing imported sulfur, which is typically required for that location. Management noted that even if the conflict ceases, supply chain normalization would take several months.

Boron Chemicals Business Recovery

The boron chemicals business faced significant production losses in the first half of FY26 due to disruptions in boron ore supply from a key supplier in Turkey. However, in the second half of the year, the plants resumed full capacity operations. The company now holds adequate stock to support ongoing production, indicating a recovery from the earlier supply chain issues.

Working Capital Expansion and Debt

DMCC experienced a substantial expansion in its working capital requirements during the quarter. This was driven by the need to pay advances for boron ore (with a 90-120 day lead time) and higher prices for sulfur, leading to increased debtor and stock values. Consequently, short-term borrowings expanded, and the interest cost on these borrowings was in the range of 8.75% to 9%. Despite this, the company maintains a healthy working capital to sales ratio, estimated at less than two months, which is within industry norms.

Specialty Chemicals Market Diversification

The company successfully diversified its market presence to offset the struggles in the European market for specialty chemicals. Most of the lost European business has been replaced by new contracts in Latin America, with additional traction seen in Japan, Korea, and China. For specialty chemicals, price increases are passed on through quarterly contracts, leading to a temporary lag in realization during sharp raw material price hikes, but margins tend to average out over time.

R&D and New Product Development

DMCC's R&D efforts are primarily focused on process development and improvements, with an annual spend of no more than INR 2 crores. Management acknowledged the need to increase R&D intensity to become a 'true specialty player' and plans to do so in the coming quarters. The company has also started commercial sales for a new polymer product used in enhanced oil recovery and other applications, indicating progress in new product development.

Nalimbi Land Monetization Status

The company provided an update on a land parcel near Ambernath, specifically in Nalimbi, which was previously declared forest land. Despite a favorable Supreme Court verdict, the Maharashtra government has not yet transferred the land back to DMCC's name. As a result, the company is currently unable to monetize this asset, though it is actively exploring options for its eventual sale.

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