DMCC Speciality Chemicals LtdQ1 FY21Chemicals & Petrochemicals

DMCC Speciality Chemicals Ltd

Q1 FY21 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Revenue guidance

Category 2

→Objective to double revenue once new projects come up, potentially reaching around Rs. 400 crore turnover by FY24.
→Sulfuric acid plant at Dahej expected to run at full capacity soon, contributing significantly to revenue.
→Specialty chemical products have good visibility with customers eagerly waiting for capacity expansion.
→Multipurpose specialty plants will take time to ramp up, with some products scaling faster than others.
→Specialty chemical segment targets EBITDA margins above 30% for new products.
→Bulk chemicals expected to start first, with commodity chemicals having lower margins initially, followed by stabilization.
→Long-term strategy focuses on doubling revenue through CAPEX of around Rs. 100 crore, with Dahej and Roha plants as main production sites.
→No major new greenfield sites planned; further growth expected through brownfield expansions focused on specialty chemicals.
→Exports aligned with domestic demand; market-agnostic growth approach.

Category 3

→Company aims to double revenue from current ~200 crore to ~400 crore once new projects fully ramp up, likely by FY24.
→Specialty chemical division targets EBITDA margins of +30% for new products; existing products maintain current margins.
→Bulk chemical products have lower margins; initial capacity ramp-up may see margin pressure but long-term margins expected similar to historical levels.
→Ongoing CAPEX of ~100 crore (Dahej and Roha plants) expected to support growth; brownfield expansions focus on specialty chemicals, no immediate new bulk chemical CAPEX planned.
→Margin impact seen due to recent raw material and freight cost spikes expected to normalize as prices adjust in contracts.
→Long-term guidance is to sustain growth within sulfur chemistry with focus on specialty and bulk chemicals and capacity utilization increasing over next 1-2 years.
→No explicit EPS forecasts given, but doubling revenues and targeted specialty margins imply improved profitability over medium term.

Get access to all 5 sections — revenue, margin, fundraise, orderbook, and capex — for DMCC Speciality Chemicals Ltd and 1,400+ other companies.

Yes

→The company plans to raise debt of around Rs. 70 crore for its ongoing CAPEX.
→The expected debt-to-equity ratio for the CAPEX is approximately 2:1 (two-thirds debt, one-third equity).
→The interest rate on rupee borrowings is typically around 9%-10%, but with interest rate swaps, the effective rate can be reduced below 5%.
→Debt funding is expected to come mostly in the current quarter, with some already recorded post-April.
→There is no mention of any new equity fundraising planned at this time.
→No plans for additional greenfield sites or CAPEX beyond the current Rs. 100 crore investment are announced, thus limiting further fundraising needs in the immediate future.

→Bimal Goculdas mentions good visibility for specialty products, with customers eagerly waiting for capacity to come up (Page 17).
→Several contracts exist, but specifics are not publicly disclosed due to confidentiality (Page 17).
→Specialty chemical products, particularly sulfones, are becoming substantial, with demand increasing from regions such as Japan, the U.S., and Europe (Page 14).
→Multipurpose plants require time to ramp up, including market approvals and scaling from pilot to commercial scale (Page 13).
→Overall, the company expects to have all plants commissioned and running by March 2022 with full capacity utilization depending on market conditions (Page 13).

Yes

→The company is investing about ₹100 crore in expansion across two sites: Dahej and Roha.
→At Dahej, two multipurpose plants are being set up with a combined investment of ₹20 crore (₹10 crore each).
→The CAPEX aims to double the company's turnover, with Dahej and Roha plants expected to contribute similarly.
→Post this CAPEX phase, the company has spare land but no current plans for another greenfield site.
→The bulk chemical expansion will be mostly complete with this CAPEX, and future expansions are expected mainly in specialty projects.
→Commissioning for some projects (bulk chemicals) expected around June 2021, but specialties will take longer due to market and product approvals.
→Debt-to-equity for the CAPEX is expected at a 2:1 ratio, with borrowing costs between 9-10%, potentially lowered via interest rate swaps.
→No immediate plans for large investments beyond current CAPEX; focus remains on sulfur chemistry and expanding product lines within it.

How does DMCC Speciality Chemicals Ltd rank vs peers in Chemicals & Petrochemicals?

Pro feature

1DMCC Speciality Chemicals Ltd

Rev 2Mar 3

See full Chemicals & Petrochemicals sector rankings

Want more stocks like DMCC Speciality Chemicals Ltd?

Build an AI portfolio filtered by sector, market cap, and growth rank. Takes 2 minutes.