DCM Shriram margin falls for third straight quarter as costs outpace sales
Revenue grew 21.55% YoY, but lower other income and a 31.14% tax rate left net profit down 33.42%.
Filed 26 Oct 2026, 17:27 IST · after market close · DCM Shriram Ltd (DCMSHRIRAM)
Key takeaways
- Consolidated revenue grew 21.55% YoY, but expenses rose faster at 24.39%, cutting operating margin by 2.12 percentage points.
- Net profit fell 33.42% YoY to Rs 105.68 cr as lower other income and weaker operating profit outweighed lower interest and tax rates.
- Operating margin declined for a third straight quarter to 7.33%, from 13.95% in Q3FY26.
Price around the results
Sales growth did not translate into operating profit
DCM Shriram's consolidated revenue rose 21.55% YoY and 11.57% QoQ to Rs 3,976.58 cr, but operating profit fell 5.74% YoY and 13.43% QoQ. That pushed operating margin down 2.12 percentage points YoY and 2.11 percentage points QoQ to 7.33%.
Other income and tax changes shaped reported profit
Other income fell 71.11% YoY and 73.64% QoQ, and accounted for 18.60% of pre-tax profit, making earnings quality weaker than the revenue growth suggests. Interest expense fell 17.67% YoY and 13.70% QoQ, but depreciation rose 10.05% YoY, limiting the benefit below operating profit. The 31.14% tax rate was 4.30 percentage points lower YoY, partly cushioning the 37.57% decline in pre-tax profit; the QoQ comparison is distorted by the prior quarter's negative 151.78% tax rate.
Margin has fallen in three consecutive quarters
Operating margin has declined from 13.95% in Q3FY26 to 11.06% in Q4FY26, 9.44% in Q1FY27 and 7.33% in Q2FY27. This is the third straight sequential decline and leaves the current margin 2.11 percentage points below Q1FY27. Management said the chemical industry is dealing with volatile input costs, uneven regional demand and oversupply that is affecting prices and margins.
Management points to chemicals, agriculture and capacity additions
Management said chemicals growth should continue over the medium term, supported by domestic demand, while the company is addressing domestic pricing pressure through exports, downstream integration and cost-efficiency measures. The company told analysts that PVC and carbide demand could see a short-term rebound after the monsoon, and that sugarcane crushing at its plants is expected to start in the first week of November. Management also said it is expanding formulated resins capacity by 36 KTPA at Hindusthan Specialty Chemicals and plans a 40 MW peak solar plant at Kota with an investment of Rs 145 cr.
Results were filed after market close
The consolidated results were filed after market close, so there was no immediate market reaction to report. In the previous eight result-day observations, the stock rose five times and fell three times, with a median absolute move of 0.83%, providing a relatively modest historical benchmark for post-results volatility.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹3,977 cr | ₹3,564 cr | +11.57% | +21.55% |
| Other income | ₹29 cr | ₹108 cr | -73.64% | -71.11% |
| Expenses | ₹3,685 cr | ₹3,228 cr | +14.18% | +24.39% |
| Operating profit | ₹291 cr | ₹337 cr | -13.43% | -5.74% |
| Operating margin (%) | 7.33% | 9.44% | — | — |
| Interest | ₹35 cr | ₹41 cr | -13.70% | -17.67% |
| Depreciation | ₹131 cr | ₹128 cr | +2.03% | +10.05% |
| Profit before tax | ₹153 cr | ₹275 cr | -44.27% | -37.57% |
| Tax | ₹48 cr | ₹-418 cr | — | -45.15% |
| Net profit | ₹106 cr | ₹693 cr | -84.76% | -33.42% |
| EPS (₹) | ₹6.72 | ₹44.72 | -84.97% | -33.73% |
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -5.93% | -5.91% |
Volume on the results session was 0.71× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- Chemicals growth is expected to continue over the medium term, driven by robust domestic demand and subject to global supply-chain developments.
- Vinyl expects a short-term rebound in PVC and carbide demand after monsoon withdrawal.
- Sugarcane crushing at the company's plants is expected to start in the first week of November.
- The company expects Rabi demand to remain cautiously optimistic, with selective growth opportunities.
- Favourable mustard economics, strong vegetable prices and crop diversification are expected to drive input demand.
Expansion
- A 52,000 TPA epichlorohydrin plant at Bharuch is scheduled for completion in April 2026.
- The company plans to acquire salt works with total capacity of 208,000 MTPA by Q3 FY2027.
- The company is setting up a 40 MW peak solar plant at Kota by Q1 FY2028 with an investment of Rs 145 crore.
- Formulated resins capacity in HSCL is being expanded by 36 KTPA, with commissioning expected by Q2 FY2028.
- The company is investing Rs 120 crore in caustic soda debottlenecking at Bharuch and Kota, expected to finish by Q4 FY2028.
New initiatives
- The company is mitigating domestic pricing pressure through export-market expansion, downstream integration and cost-efficiency optimisation.
- The company signed an agreement to supply up to 58 MW peak renewable energy and develop related infrastructure at Bharuch.
- The chemicals business is expanding into advanced materials through formulated resins capacity at HSCL.
- Shriram Farm Solutions launched eight new products in H1 FY27, including five developed through its own R&D.
Problems & risks
- The global chemical industry is facing volatile input costs and uneven demand across regions.
- Chemical industry oversupply from demand-supply imbalance is affecting near-term prices and margins.
- Indian PVC demand declined 2% in H1 as monsoons slowed construction and high prices caused buyers to destock.
- Sugar margins were partly offset by increased production costs caused by higher cane prices.
- Bioseed revenue declined mainly because severe El Nino conditions reduced demand, particularly in southern and central India.
What to watch
- Whether operating margin holds above 7.33% after three consecutive quarterly declines.
- Whether expense growth falls below the 14.18% QoQ rate against revenue growth of 11.57%.
- Whether the reported PVC and carbide demand rebound follows the company's reference to a post-monsoon improvement.