DCM Shriram profit jumps on tax credit as operating margin slips
Net profit was lifted by a -151.78% tax rate and other income equal to 39.33% of pre-tax profit, while costs outpaced revenue sequentially.
Filed 28 Jul 2026, 16:19 IST · after market close · DCM Shriram Ltd (DCMSHRIRAM)
Key takeaways
- Consolidated net profit rose 509.24% YoY to Rs 693.44 cr, largely reflecting a tax credit of Rs 418.02 cr and higher other income.
- Operating margin narrowed 1.62 percentage points QoQ to 9.44% as expenses grew 13.64% against 11.61% revenue growth.
- Management said domestic PVC demand may remain soft during the monsoon, while domestic sugar prices are expected to remain firm.
Price around the results
Tax credit drives the profit surge
Consolidated pre-tax profit increased 61.86% YoY, but net profit rose 509.24% because the tax line turned into a Rs 418.02 cr credit from a Rs 56.34 cr charge a year earlier. The tax rate fell from 33.11% to -151.78%, so the reported profit increase does not represent operating performance alone. Other income of Rs 108.31 cr accounted for 39.33% of pre-tax profit.
Sequential margin pressure returns
Revenue grew 11.61% QoQ, but expenses rose faster at 13.64%, reducing operating margin by 1.62 percentage points to 9.44%. This was the second consecutive quarterly decline in operating margin, after 13.95% in Q3FY26 and 11.06% in Q4FY26. Year on year, the picture was steadier: revenue grew 9.27% and expenses 9.10%, lifting margin by 0.14 percentage points.
PVC and sugar remain the key business contrasts
The presentation reported caustic plant utilisation at 82% in Q1FY27, up from 80% a year earlier. Management said global chemical markets remained oversupplied and that energy and freight costs were volatile; it also said Chinese PVC imports continued after customs-duty waivers. Management said domestic PVC demand is expected to remain soft because of the monsoon, while domestic sugar prices are expected to remain firm despite an 8% fall in domestic sugar volumes.
Expansion pipeline adds several near-term milestones
Management said the first phase of the Fenesta aluminium extrusion plant at Kota and a 100 TPD aluminium chloride plant at Bharuch are expected in Q2 FY27. It also said a proposed acquisition of salt works with 208,000 MTPA capacity is expected in Q3 FY27, while the Rs 101 cr formulated-resins expansion is expected to be commissioned in Q2 FY28. The company told investors that its Kota renewable-power project had begun average injection of 25 MW in July.
No immediate market reaction after the filing
The results were filed after market close, so there is no reported same-day share-price reaction to assess. After the previous eight results, the stock rose five times and fell three times, with a median absolute move of 1.00%.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹3,564 cr | ₹3,193 cr | +11.61% | +9.27% |
| Other income | ₹108 cr | ₹78 cr | +38.56% | +387.44% |
| Expenses | ₹3,228 cr | ₹2,840 cr | +13.64% | +9.10% |
| Operating profit | ₹337 cr | ₹353 cr | -4.68% | +10.89% |
| Operating margin (%) | 9.44% | 11.06% | — | — |
| Interest | ₹41 cr | ₹40 cr | +3.61% | -6.70% |
| Depreciation | ₹128 cr | ₹138 cr | -6.88% | +15.09% |
| Profit before tax | ₹275 cr | ₹254 cr | +8.54% | +61.86% |
| Tax | ₹-418 cr | ₹-117 cr | -257.13% | — |
| Net profit | ₹693 cr | ₹371 cr | +87.01% | +509.24% |
| EPS (₹) | ₹44.72 | ₹23.71 | +88.61% | +515.13% |
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Caustic plant capacity utilization was 82% in Q1 FY27, compared with 80% a year earlier.
Guidance & outlook
- Domestic PVC demand is expected to remain soft because of the monsoon.
- Global sugar demand and supply are expected to remain in deficit, and domestic prices are expected to remain firm.
- Domestic sugar prices are expected to remain firm.
Expansion
- The company plans a phased Fenesta aluminium extrusion plant at Kota, with the first phase expected in Q2 FY27.
- A 100 TPD aluminium chloride plant at Bharuch is expected to be completed in Q2 FY27.
- A proposed acquisition of salt works with total capacity of 208,000 MTPA is expected in Q3 FY27.
- The company is investing Rs 101 crore to expand formulated resins capacity by 36 KTPA, with commissioning expected in Q2 FY28.
New products
- Shriram Farm Solutions launched four new seed products developed through its own R&D.
New initiatives
- The Kota renewable power project with JSW Renewables has started average injection of 25 MW for July.
- The HSCL acquisition supports forward integration of ECH into epoxy and entry into advanced materials.
- The company is focusing on cost competitiveness and operational flexibility in its chemical business.
- Shriram Farm Solutions is focusing on strategic alliances, farmer outreach, technology-enabled operations and portfolio balance.
Problems & risks
- Global chemical markets remained oversupplied, while energy and freight costs were volatile.
- Chinese PVC imports continued after customs-duty waivers, while Middle East conflict increased costs.
- Domestic sugar volumes fell 8% in Q1 FY27 because of lower offtake.
- Higher cane prices increased sugar production costs.
- Delayed rainfall reduced Bioseed demand and lowered corn and paddy volumes.
What to watch
- Whether operating margin holds above 9.44% after two consecutive quarterly declines.
- Whether other income remains near 39.33% of pre-tax profit.
- Whether domestic sugar volumes recover from the reported 8% Q1FY27 decline.