DCMSHRIRAM - DCM Shriram Limited Share Price

Management of DCM Shriram Limited provided a cautiously optimistic outlook for the remainder of FY '26. They highlighted the resilience of the global economy amidst volatility, while also acknowledging risks such as trade frictions and supply chain disruptions. The company is positioned to capitalize on India's strong domestic consumption and structural reforms, particularly with the recent introduction of GST 2.0, which aims to enhance affordability and stimulate growth.

Key forward-looking points include:

1. Growth Initiatives: Management aims to enhance operational agility by tightening supply chains and increasing customer proximity. They are focusing on strategic acquisitions, such as the finalized acquisition of Hindusthan Speciality Chemicals and a planned acquisition of a salt works with 2.1 lakh metric tons per annum capacity for approximately INR 175 crore, expected to secure 13% of their total salt demand.

2. Expansion Plans: DCM Shriram plans to ramp up capacity in key areas, such as the recently commissioned 35,000 tons per annum Epichlorohydrin facility and the ongoing operations of ECH with domestic demand projections supporting robust growth.

3. Sustainable Practices: The company reiterated its commitment to sustainability, which they have incorporated into their core business strategies, including a 68-megawatt green power project aimed at reducing reliance on conventional energy sources.

4. Financial Performance: For Q2 FY '26, net revenues grew 11% year-on-year to INR 3,272 crore, with PBDIT jumping 74% to INR 408 crore. The outlook remains positive with expectations of maintaining healthy and stable growth, bolstered by strategic investments in the chemical segment and solid cash flow metrics.

5. Market Dynamics: The chemical sector shows promising signs, supported by strong caustic soda demand and expanding portfolio in advanced materials, while sugar production forecasts indicate a surplus, calling for government interventions to support pricing.

In summary, management is optimistic about long-term growth, backed by strategic investments and expansions while navigating ongoing challenges in the global market landscape.

Q&A Summary from DCM Shriram Limited Q2 FY '26 Earnings Call

Question 1:

Ahmed Madha: "Regarding the Farm Solutions business, is there some pre-buying or channel inventory filling for the next quarter's performance in Q2?"

Ajay Shriram: "Yes, in Shriram Farm Solutions, we do anticipate pre-sales for our wheat seeds as part of our business strategy. This involves giving advances for seed purchases from farmers and our dealership network, which is integral to our operations."

Question 2:

Ahmed Madha: "Can you give a sense of contribution from the Hindusthan Chemicals acquisition in Q2?"

Amit Agarwal: "The acquisition was completed on August 26, 2025, with about one month of contribution. The business was making losses, so we anticipate breaking even by year-end, but expect marginal losses in the upcoming quarters."

Question 3:

Ahmed Madha: "What are the potential cost benefits from the salt field acquisition, and what can be the peak production?"

Amit Agarwal: "The salt acquisition aims to protect against price volatility and secure supplies. While it covers only 13% of our total requirement, preliminary margins could be around 30-40%. Current market prices are about INR 2,300 per ton."

Question 4:

Ahmed Madha: "How does the sugar business outlook look considering the higher sugarcane prices?"

Ajit Shriram: "We expect government support for sugar exports of about 2 million tons which should help stabilize prices. However, export prices are lower than domestic prices, so advocacy for incentivized exports is necessary."

Question 5:

Nirav Jimudia: "What are the replacement intervals for electrolyzers in our caustic soda plant?"

Aditya Shriram: "Membranes are changed every 4 years and the cathode and anode every 8 years. Replacement ensures efficiency and reduces power consumption, which is crucial for maintaining operational effectiveness."

Question 6:

Nirav Jimudia: "What is the current chlorine pricing, and how do you foresee it moving forward?"

Aditya Shriram: "Chlorine prices are currently around negative 7,000 to negative 8,000. While they may remain negative for now due to oversupply, we expect a gradual improvement as downstream demand increases."

Question 7:

Rohit Nagraj: "What is the impact of impending anti-dumping duties on PVC imports?"

Amit Agarwal: "PVC imports were affected due to decreased demand and concerns over potential duties being implemented. This has led to cautiousness in placing orders, rather than a supply issue from China."

These responses address key concerns and strategies for DCM Shriram in Q2 FY '26, providing insights into the company's operational dynamics and market conditions.