The shares of the petrochemical manufacturer gained up to 1.3 percent after the company announced a significant investment of Rs 140 crore to expand its CPVC (Chlorinated Polyvinyl Chloride) production capacity.
With a market capitalization of Rs 3,053.38 crore, the shares of DCW LTD. were trading at Rs 103.45 per share, increasing around 0.39 percent as compared to the previous closing price of Rs 103.05 apiece.
Reason for rise:-
Today the shares of the company have seen positive movement after DCW LTD announced a significant investment to expand its CPVC (Chlorinated Polyvinyl Chloride) production capacity from 20,000 metric tonnes (MT) to 50,000 MT.
Moreover, this extension will increase capacity by 30,000 MT using a combination of new installations, de-bottlenecking existing facilities, and process optimization. The capacity expansion will be implemented in stages, with 20,000 MT projected to be operational in the second part of Q2 FY26 and an additional 10,000 MT by the end of FY26.
Furthermore, the overall investment of Rs. 140 crore is in line with the growing demand for CPVC in a variety of sectors. DCW Limited intends to fund 30% of the project through internal accruals and the remainder through debt, with the goal of reducing overall debt in the future.
DCW Limited’s competitive advantage stems from its ability to use its own S-PVC (Suspension PVC) as a raw material under favorable market conditions. This skill enables the consistent quality and availability of CPVC production inputs, hence strengthening the company’s market position.
Financial Analysis:-
Looking forward to the company’s financial condition, DCW Ltd.’s revenue zoomed by 14 percent from Rs 438.04 crore in Q1FY24 to 499.52 crore in Q1FY25. During the same period, net profits shrunk by 33 percent from Rs 9.99 crore to Rs 6.73 crore.
Product Segment Insights:-
The company’s commodity segment volumes exhibited marginal year-on-year growth, except for synthetic rutile, which faced challenges. Specialty chemicals, particularly CPVC and SIOP, saw an 80% sales volume increase due to new capacity from recent CAPEX. However, synthetic rutile prices and volumes remain pressured by global volatility, especially from China.
CAPEX and Capacity Expansion:-
Strategic investments in specialty chemicals include doubling CPVC capacity and line balancing CAPEX, with CPVC production reaching 100% in Q1, boosting sales volumes. SIOP capacity is ramping up slowly, showing a 15% increase in production volumes compared to the previous fiscal year.
Market Conditions and Pricing Outlook:-
The company anticipates continued subdued pricing in commodity chemicals due to excessive dumping. Specialty chemicals are expected to maintain stable pricing and increased volumes. Meanwhile, PVC prices remain firm but show signs of correction as they enter Q2.
Management Outlook:-
Management recognizes challenges from price erosion in commodity segments like caustic soda, soda ash, and synthetic rutile. They remain optimistic about specialty chemicals, expecting better performance in H2 FY25. While not providing specific revenue or margin guidance due to global uncertainties, they emphasize cost control and capacity maximization.
Company Outlook:-
DCW Limited is an India-based multi-products chemical company. The Company is engaged in the manufacture and sale of chemicals, such as soda ash, caustic soda, synthetic rutile, and others. The Company’s segments include Soda Ash, Caustic Soda, Synthetic Iron Oxide Pigments, PVC, CPVC, and Others.
Written by:- Abhishek Singh
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