Synopsis:
DCM Shriram’s Q1 revenue rose 13% YoY to Rs. 3,262 crore; net profit Rs. 114 crore. Management remains cautious on ethanol segment.
A leading Indian ethanol and sugar processor, diversifying into chemicals, reported mixed quarterly results. While revenue grew year-on-year and sequentially, profit declined sharply quarter-on-quarter despite an annual gain. Management expressed caution about ethanol segment pressures, even as they expand into advanced materials through acquisition, against a challenging global economic backdrop.
DCM Shriram Limited’s stock, with a market capitalisation of Rs. 21,498 crores, fell to Rs. 1,357, hitting a low of up to 2.27 percent from its previous closing price of Rs. 1,388.60. However, the stock over the past year has given a return of 38.7 percent.
Management Guidance
Sugar & Ethanol Challenges: While stable, this segment faces margin pressure. Low stock levels may support sugar prices, but a retrospective ethanol export fee in UP is considered regressive, highlighting the need for sugar policy reform.
Business Segment Updates: The caustic soda business saw volume-led growth despite global supply chain disruptions. The company is expanding into advanced materials with the acquisition of Hindusthan Specialty Chemicals Ltd
Global Economic Outlook: Global growth is barely above recession levels due to trade tensions, policy unpredictability, and geopolitical issues, leading to investment slowdowns and supply chain disruptions.”
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Q1 Results Update
In Q1FY26, the company reported revenue of Rs. 3,262 crore, representing a 13.4 percent year-on-year (YoY) growth compared to Rs. 2,876 crore in Q1FY25 and a slight increase of 13 crore quarter-on-quarter (QoQ) from Rs. 2,877 crore in Q4FY25. Over the past three years, sales have grown at a CAGR of 8 percent, demonstrating consistent, albeit moderate, top-line expansion.
Net profit for Q1FY26 stood at Rs. 114 crore, up 14 percent YoY from Rs. 100 crore in Q1FY25, but declined 36.3 percent QoQ from Rs. 179 crore in Q4FY25. Despite the recent YoY profit growth, the company’s 3-year profit CAGR remains negative at -18 percent, indicating historical earnings challenges. Return on equity (ROE) has compounded at 10 percent over the same period, reflecting moderate value creation for shareholders.
Written By Fazal Ul Vahab C H
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