DCM Shriram FY26: Chemicals integration drives growth, while sugar and PVC remain volatile

DCM Shriram closed FY26 with consolidated net revenue of INR 13,538 crore, up 12% year on year, and PBDIT of INR 1,694 crore, up 15%. Profit after tax rose 42% to INR 856 crore. The company disclosed that PAT was supported by a deferred tax credit of INR 239 crore after it elected to exercise the lower tax regime option under Section 115BAA from FY27, which triggered a remeasurement of deferred tax assets and liabilities.

Q4 FY26 was a mixed quarter. Net revenue (net of excise duty on country liquor) rose 11% to INR 3,193 crore, while PBDIT fell 6% to INR 400 crore. Segmentally, Chemicals posted strong revenue growth but flat quarterly profitability due to elevated fixed costs from expansion and stabilization. Sugar and ethanol saw margin pressure from higher cane costs and softer ethanol realizations. Fenesta continued to grow volumes and order book, with profitability moderated by scaling and mix.

FY26 at a glance

Notes: Net revenue is net of excise duty of INR 726 crore in FY26 on country liquor sales. PAT includes a deferred tax credit of INR 239 crore.

Chemicals and advanced materials: the growth spine

The Chemicals and Vinyl segment delivered FY26 revenue of INR 4,651 crore, up 31%, with PBIT of INR 560 crore and PBIT margin of 12%. Within this, the Chemicals business alone reported revenue of INR 3,832 crore and PBDIT of INR 750 crore, versus INR 2,777 crore and INR 500 crore in FY25. Management attributed the performance to volume growth from capacity ramp-up and contributions from newer projects in the advanced materials chain and hydrogen peroxide.

A key strategic theme was forward integration. Management stated that the Epichlorohydrin (ECH) plant at Bharuch was fully commissioned in April 2026 and is seeing encouraging market acceptance. On the earnings call, management said the ECH plant was running at about 60% to 70% utilization, with a steady ramp-up expected over the next one to two quarters, supported by ongoing customer approvals. They also clarified that, given current downstream consumption needs, around 70% to 75% of ECH output is expected to be sold in the market.

The company also expanded its epoxy footprint via the acquisition of Hindusthan Speciality Chemicals Limited (HSCL), completed in August 2025. It approved INR 101 crore capex to expand formulated resins capacity by 36 KTPA, taking total formulated resins capacity to 50 KTPA, with expected commissioning by Q2 FY28. On the call, management said the acquired unit had been loss-making, that initial months were used for stabilization, and that they expect the entity to reach break-even in FY27.

Vinyl: strong Q4, uncertain pricing backdrop

Vinyl performance was bifurcated. Q4 FY26 showed a sharp improvement in PBDIT, helped by better prices and efficiencies, while FY26 profitability remained lower than FY25 due to weaker realizations and the absence of a one-time benefit booked in FY25.

Management repeatedly emphasized volatility in PVC pricing. They described a sequence of China-led dumping pressure, subsequent price spikes linked to Middle East conflict and currency movement, and renewed softness after the Government of India waived import duties through end-June 2026. They also noted that the domestic PVC industry has represented for measures such as a minimum import price and quality control requirements.

Strategically, the company announced a technology-led partnership by selling 50% of its PVC compounding subsidiary, Shriram Polytech Limited, to Teknor Apex B.V. (April 2026). Management positioned this as a way to combine Shriram Polytech’s manufacturing base with Teknor Apex’s global formulation expertise to accelerate growth in specialized compounds.

Sugar and ethanol: policy and cost pressures remain central

Sugar and ethanol revenue was INR 3,770 crore in FY26, down 2%, with PBIT of INR 309 crore and a stable PBIT margin of 8%. Q4 profitability, however, declined as higher cane costs weighed on sugar margins and ethanol realizations softened.

Management stated the industry is facing margin pressures from higher cane cost and oversupply in both sugar and ethanol. They stressed the importance of sustained policy support through sugar MSP, blending mandates, export facilitation, and alternate ethanol usage.

The company disclosed that its sugar season 2025-26 ended with lower cane crush of 473 lakh quintals versus 535 lakh quintals last year, though recovery improved to 10.8% from 10.5%. Inventory as of March 31, 2026 was 32.2 lakh quintals, valued at INR 3,876 per quintal.

On ethanol, management highlighted structural bottlenecks. Against national capacity of about 1,900 crore litres, OMC allocations were described at about 1,100 crore litres, with sugarcane-based feedstocks restricted to 28%. Management argued that sector viability needs better alignment of sugar and ethanol prices with cane costs and a more supportive allocation framework for sugarcane-based ethanol.

Fenesta and farm solutions: consumer engines scaling with investment

Fenesta Building Systems crossed INR 1,000 crore revenue for the year, reporting FY26 revenue of INR 1,112 crore, up 28%. The order book rose to INR 1,498 crore (up 24% during the year). PBDIT was INR 150 crore, slightly below last year, as margins moderated due to mix and elevated fixed costs from scaling the core business and building new platforms such as facade and hardware.

Fenesta’s capex pipeline includes an aluminium extrusion plant at Kota, with the first phase expected to be commissioned in Q1 FY27. Management described this as a capability upgrade for the growing aluminium fenestration and building materials segment.

Shriram Farm Solutions posted FY26 revenue of INR 1,689 crore, up 18%, with PBDIT of INR 296 crore, up 5%. The company stated it launched 13 new products in crop protection and specialty plant nutrition during the year, including four products from its own R and D. Management also cited growth spending in brand building and R and D as drivers of higher fixed expenses.

Capital allocation, capex and sustainability

Management said the company is concluding a major capex cycle in chemicals and is now positioned for strategic capital deployment. On the call, the CFO indicated FY27 capex guidance in the range of INR 1,000 to 1,200 crore (including normal capex and committed board-approved projects).

Sustainability was positioned as a structural agenda. Management stated it has institutionalized a pledge to reduce Scope 1 and Scope 2 emissions by 40% by 2040. It also disclosed raising sustainability-linked non-convertible debentures from IFC in March 2026.

On renewable energy, the company disclosed a group captive arrangement for up to 68 MW peak renewable energy for the Kota complex, with average injection of 15 MW starting from May 4, 2026. For Bharuch, it approved additional about 48 MW peak renewable power and related infrastructure, with an investment of INR 217 crore and a stated completion timeline around Q1 FY28.

Takeaways

FY26 reinforced DCM Shriram’s direction of travel. Chemicals and downstream integration delivered the most visible operating leverage, and the advanced materials chain is moving from commissioning to ramp-up. Fenesta and Shriram Farm Solutions continued to scale, although margins reflected growth investments. The key variables to watch remain commodity and policy-linked: sugarcane economics in sugar and ethanol, and import-driven volatility in PVC.

Management’s near-term signposts are clear in their own words: ramp-up of ECH utilization after April 2026 commissioning, break-even in the acquired epoxy unit in FY27, and disciplined capex of INR 1,000 to 1,200 crore in FY27 while expanding renewable power and select downstream chemical capacities.