DCW Limited Q3 FY26 Earnings Call Summary

Summary

DCW Limited - Q3 FY26 Earnings Call Summary Wednesday, February 11, 2026 4:00 P.M. IST

Event Participants

Executives 3 Pradipto Mukherjee (CFO), Saatvik Jain (President), Sudarshan Ganapathy (COO)

Analysts 5 Aahan Khan (Individual Investor), Amit Kumar (Determined Investments), Ashish (Leo Capital), Heli Shah (Individual Investor), Jimith Mehta (Individual Investor), Pujan Shah (Molecule Ventures)

Financials & KPIs

Geographic & Segment Commentary

• Specialty Chemicals: Revenue grew 27% YoY to ₹156 crores, anchored by record CPVC sales volumes following capacity expansion from 20kt to 40kt. SIOP volumes grew 19% with stable realizations, while CPVC faced a 26% YoY price decline. This segment now provides the primary buffer for overall company profitability.
• Basic Chemicals: Revenue reached ₹362 crores (+3.8% YoY) but EBITDA fell to breakeven from ₹14 crores in the prior year. Performance was hampered by a 17% drop in PVC realizations and a 9% drop in Soda Ash prices, leading to significant pressure on the PVC/VCM spread.
• Export Markets: Exports account for 22% of revenue. Management noted SIOP exports to the U.S. remain unaffected by recent tariff proposals due to prior exclusions, and they view potential zero-tariff regimes in Europe as a net benefit.

Company-Specific & Strategic Commentary

• CPVC Expansion: The final leg of the 10,000-tonne expansion is on track for commissioning next month, which will bring total annual capacity to 50,000 tonnes (Saatvik Jain).
• Portfolio Shift: The company is transitioning toward a specialty-led model to reduce cyclicality; Specialty Chemicals generated 100% of the quarter’s EBITDA (Pradipto Mukherjee).
• Digital & Process Excellence: Completion of SAP S4 HANA and process standardization initiatives by FY26 end to support a scalable, modern operating base (Saatvik Jain).
• Energy Efficiency: Renewable power substitution (solar) provides annual savings of ₹25-26 crores, though current TN government policies and battery costs limit further immediate expansion (Sudarshan Ganapathy).

Guidance & Outlook

Risks & Constraints

Q&A Highlights

PVC & CPVC Dynamics

• Question: Are we seeing CPVC price increases following the ₹9/kg hike in PVC? (Pujan Shah)
• Answer: There is a price lag, but management expects to realize higher prices in March as the positive momentum from PVC flows through (Pradipto Mukherjee).
• Question: How will peer capacity additions impact the CPVC market? (Ashish)
• Answer: Domestic availability will primarily replace imports and create new demand in applications like fire sprinklers; no overcapacity is foreseen (Sudarshan Ganapathy).

Debt & Interest

• Question: What is the interest cost outlook for FY27? (Pujan Shah)
• Answer: Interest is expected to be around ₹45 crores on a steady-state basis, potentially dropping toward ₹25 crores as legacy dues are cleared and only working capital remains (Pradipto Mukherjee).

Synthetic Rutile (SR)

• Question: What is the status of the Japanese supply agreement for SR? (Pujan Shah)
• Answer: Q4 dispatches will exceed production, significantly reducing inventory. Contracts with traditional customers for next year are in advanced stages (Sudarshan Ganapathy).

Key Takeaway

DCW Limited delivered a resilient Q3 FY26, with revenue growing 9.6% YoY to ₹520 crores despite a challenging global chemical environment. The performance was characterized by a sharp divergence between segments: Specialty Chemicals saw record CPVC volumes (+80%) and 27% revenue growth, while Basic Chemicals hit an EBITDA breakeven due to a 17% decline in PVC realizations. Strategically, the company is nearing the completion of its 50,000-tonne CPVC expansion and has successfully utilized its specialty portfolio to offset commodity price erosion. Management is aggressively deleveraging, expecting to end FY26 with legacy debt down to ₹225 crores while holding ₹220 crores in cash. Looking forward, the removal of Chinese export VAT rebates and a bottoming out of PVC prices provide a constructive backdrop for FY27, though the company remains watchful of global demand recovery and input cost volatility.