DCMSHRIRAM - DCM Shriram Limited Share Price

Management provided a cautious outlook due to a complex global economic environment, with India's growth forecast for FY2026 revised down to 6.5% by the Reserve Bank of India. Key forward-looking points include:

1. Revenue Growth: Net revenues for FY '25 rose to Rs. 12,077 crore, up 11% year-on-year, attributed to strong performance across business segments, especially Chemicals and Shriram Farm Solutions.

2. Continued CAPEX: The company expects to incur CAPEX of Rs. 500-600 crore in FY '26, focusing on strategic growth and expansion opportunities, particularly in chemicals and advanced materials, including the Epoxy project with a potential investment of up to Rs. 1,000 crore for an 80-kilotons capacity.

3. Energy Mix Improvement: Currently, 36% of energy is sourced from renewable resources, with plans to increase this to 40% over the next two years, in line with their sustainability targets.

4. Chlorine Utilization: The company aims to enhance chlorine utilization and is exploring alternatives to improve profitability. They project that by completing expansions, their captive chlorine consumption could increase to around 44%, impacting overall pricing positively.

5. Product Diversification: Fenesta aims to expand its product offerings, focusing on new innovative products, as well as leveraging the acquisition of DNV Global Private Limited for operational synergy and market presence enhancement.

6. Dividend Declaration: A final dividend of 170% (Rs. 53.02 crore) was recommended, leading to a total dividend of 450% for the year.

7. Chemical Segment Performance: The Chemicals sector was highlighted for a 52% revenue increase, benefiting from better caustic soda prices and capacity utilization at new facilities.

Overall, while there are external challenges, the management emphasizes positive operational growth, strategic investments, and a commitment to sustainability as paths forward.

Question: "Sir, when we see our Q4 numbers, our PBIT in chemicals have improved by close to around Rs. 42 crore on a Q-on-Q basis, while the ECU is more or less flat. One reason you mentioned that we have seen an increase in the production volumes on a sequential basis. If you can share your thoughts here, like was power cost has come down sequentially or was it because of higher hydrogen sales in the outside market because of our higher caustic production or was it because we have ramped up the volumes and fixed cost were distributed over a larger part of the volumes?"

Answer: "It's a combination of factors. The significant part comes from increased volumes, which played a crucial role. Additionally, product prices versus the same period last year were better. On a sequential basis, the volume increase drives the improvement, and we also benefited from lower variable costs due to increased power usage from our new power plant."

Question: "So, if I talk of Q4, the way to look at it is that, our capacity was 1,350 tons per day before expansion. Post expansion, it is 2,225 tons per day at Bharuch. And our utilization is close to about 1,700 tons per day, which was in Q4. It is inched up a little bit, but yes, it is in the range of 1,700 to 1,800 tons per day."

Answer: "Correct, in Q4, our utilization levels were approximately 1,700 tons per day, which reflects our operational efficiency post-expansion. This increase demonstrates our enhanced capacity resulting from the commissioning of the new facility."

Question: "So on the PVC side, so just wanted to understand on a brief part that we know there is subdued demand, as well as dumping from Chinese guys out there. There is a delay in the implementation of ADD. So just wanted to know on a broader case if there would be an uptick in demand and inventory restocking, how will the prices evolve?"

Answer: "Demand in India is consistently growing at around 6"“8% per year, which is a stable position. The anti-dumping duty situation is in court, and the next hearing is soon. If implemented, it could help stabilize prices against low-priced imports from China. However, the exact pricing impact remains uncertain until a decision is made."

Question: "Could you please explain if the gross contribution margin is the same compared to last year?"

Answer: "No, the gross contribution margin has decreased due to a changing product mix as we increase the share of higher-cost aluminum products. Despite the margin pressures, we anticipate continued growth in EBITDA, reflecting the overall sales increase from marketing efforts."

Question: "What will be your broad market share, if you can comment on that? And secondly, what will be the current business mix between the Retail business and the Project business?"

Answer: "In the window segment market, our share stands at approximately 25"“30%, making us a leading player. The current business mix is roughly 50% Retail and 50% Project, reflecting a balanced strategy across both segments."