DCW's march gains momentum in Q2 & H1FY23; its diversified portfolio shields against volatility

• Revenue development of 34.2% YoY and 67.3% for EBITDA YoY in H1FY23.
• Caustic Soda confirmed strong efficiency, with EBITDA rising by 5.3x YoY in H1FY23.
• Speciality Chemicals portfolio exhibits resilience, and SIOP improves its efficiency.

MUMBAI, India, Nov. 11, 2022 /PRNewswire/ — DCW Limited (“the Company” or “DCW”), a specialty chemical substances Company headquartered in Mumbai, declared its monetary outcomes for second quarter and half yr ended 30^th September 2022.

The Company sustained its development momentum in H1FY23, with its speciality and commodity chemical substances witnessing an encouraging pattern. Company EBITDA grew by 67.3% YoY. Revenue from specialty chemical substances for H1FY23 elevated by 41.3% YoY, led by a powerful efficiency from the SIOP phase. SIOP has been regularly witnessing an uptick in manufacturing, with capability utilisation rising from 49% in H1FY22 to 74% in H1FY23. Commodity chemical substances, too, carried out nicely, with income rising by 33.7% YoY in H1FY23.

The Debt of the Company presently stands at ₹544 crore. The Company, in March 2021, raised ₹410 crore from the Kotak Special Situation Fund (KSSF), which comprised ₹350 crore of Non-Convertible Debentures (NCDs) and ₹60 crore of optionally absolutely convertible Debentures (OFCDs). While the NCDs and OFCDs had been issued at a coupon of 11% & 9.17%, respectively, each had an IRR of 17% on redemption. Further, the NCDs additionally had a moratorium interval of 18 months. Out of the ₹60 crore OFCDs, ₹33 crore had been transformed into fairness, and the steadiness ₹27 crore was redeemed on the idea of the choice exercised by the Debenture holder (KSSF). The part-redemption of OFCDs (at 17% IRR) is considerably helpful to the Shareholders of the Company owing to decrease than gestated dilution to the Company’s fairness.

Additionally, the Company has refinanced its ₹350 crore NCDs with decrease interest-bearing loans from completely different bankers, given its vital enchancment in credit standing backed by money flows over the time frame. This refinancing will assist the Company to avoid wasting considerably on its future curiosity prices. The Company’s blended curiosity prices are anticipated to fall by 700-800bps from the following Quarter.

Business Segments:

• SIOP: Consistent efforts have led to a strong enchancment in the efficiency of this division. The SIOP’s plant capability utilisation has been enhancing constantly. Plant capability utilisation improved to 78% in Q2FY23 (FY20-24%, FY21-38%, FY22-54%).
• C-PVC: The income from this phase elevated by 21.4% YoY to ₹1,171.5 Mn in H1FY23. The C-PCV phase has been a constant performer over the past eight quarters and continues to ship energy and consistency to the Company’s general earnings. Despite volatility in PVC costs, CPVC has remained comparatively secure. Today, DCW stays essentially the most distinguished indigenous producer of C-PVC in India. With an obvious shortfall in the home provide of C-PVC, the Company has been capable of garner the optimum advantages of this market imbalance tactfully.
• Soda Ash: The Company had a long-term fastened value contract in FY22, which matured in Q1FY23. The Company now not entertains fastened value contracts, which allows the Company to reap the benefits of the beneficial market situation. As a end result, the EBITDA for this phase in H1YF23 stood at ₹271.4 Mn, in comparison with ₹40.1 Mn in H1FY22, delivering a development of 5.8x.
• Caustic Soda: Caustic soda costs remained beneficial in Q2FY23, particularly the post-cost value escalations in the EU. This has stored costs of caustic Soda buoyant. Revenue from this division in H1FY23 stood at ₹5,354.8 Mn, in comparison with ₹2,901.7 Mn in H1FY22, delivering a development of 84.5% YoY. EBITDA for this phase in H1YF23 stood at ₹1,675.4 Mn, in comparison with ₹266.9 Mn in H1FY22, offering a acquire of 5.3x.

Financial Highlights Q2 & H1FY23: (₹ in Mn)

• · Revenue from operations for H1FY23 stood at ₹14,664.3 Mn, delivering development of 34.2% on a YoY. Improved operational effectivity of the SIOP plant, coupled with beneficial market situations in Soda ash and Caustic Soda, led to strong efficiency in H1FY23.
• · EBITDA for H1FY23 stood at ₹2,346.9 Mn, in comparison with ₹1,403.0 Mn in H1FY22, delivering development of 67.3% YoY. PVC costs have fallen considerably over the past two quarters. However, the Company’s diversified portfolio, with the vital parts of Specialty chemical substances, mitigated the volatility and delivered secure margins for Q2FY23.
• · PAT stood at ₹1,084.1 Mn in H1FY23, in comparison with a revenue of ₹330.4 Mn in H1FY22, delivering development of 228.1% YoY.

Commenting on the outcomes, Mr. Vivek Jain, Managing Director, DCW Ltd., mentioned, “The Company’s efficiency in H1FY23 is testimony to our long-drawn technique of diversifying our product portfolio in a way which offers resilience as nicely take benefit throughout beneficial market situations. As we’ve got witnessed over the previous a number of quarters, CPVC and SIOP efficiency has been comparatively resilient and are contributing 25-30% in general EBITDA on a gradual state foundation. Once we optimise our SIOP vegetation, the contribution from SIOP will additional enhance, bringing extra consistency and stability to our earnings. The commodity phase business stays aligned with market situations. In H1FY23, the Company noticed a exceptional efficiency from Soda Ash and Caustic Soda with PVC remaining delicate.

With the technique of constructing our operations extra environment friendly and the steadiness sheet extra strong, the Company refinanced its excessive interest-bearing NCDs with market-aligned finance from main bankers. This is predicted to avoid wasting our curiosity prices and money outflows considerably. We consider our debt stays applicable, with Net Debt to EBITDA anticipated to go all the way down to ranges of 1 by the tip of this fiscal. We proceed to search for a possibility to utilise our in-house chlorine for numerous functions. We are at an thrilling crossroads for an extended, sustained development journey. We proceed to endeavour a roadmap to create new highs going ahead.”

Speciality Chemicals Business– Q2 & H1FY23

Over the final 4 years, DCW has added area of interest, value-added, high-margin speciality chemical substances to its portfolio. These embody C-PVC, SIOP and Synthetic Rutile. The Company is likely one of the few large-scale artificial iron oxide producers for crimson and yellow pigments and the one C-PVC producer in India.

The income combine between Commodity Chemicals: and Specialty Chemicals for Q2FY23 stood at 86:14. However, in Q2FY23 Specialty chemical substances contribute greater than 27% to the Company’s general EBITDA. The Company is specializing in rising the income combine from specialty chemical substances. Increasing the income share from specialty chemical substances will assist the Company to raise its margin profile and return ratios. 

SIOP:

• Revenue for H1FY23 stood at ₹772.8 Mn, as against ₹410.7 Mn in H1FY22, a development of 88.2 % YoY. Revenue development was attributable to greater quantity gross sales and enhancing capability utilisation.
• EBITDA for H1FY23 stood at ₹270.6 Mn, as against ₹67.1 Mn in H1FY22, with a development of 303.3% YoY and an EBITDA margin of 35 %.

C-PVC:

• Revenue for H1FY23 stood at ₹1,171.5 Mn in comparison with ₹965.2 Mn, a development of 21.4% on a YoY foundation.
• EBITDA for H1FY23 stood at ₹325.4 Mn, in comparison with ₹292.0 Mn in H1FY22, a development of 11.5 % YoY. The income development is attributed to higher realisations owing to a shortfall in the home provide of C-PVC.

Commodity Chemicals Business– Q2 &H1FY23

The Company’s commodity chemical business consists of Caustic Soda, Soda Ash and PVC. The Soda Ash facility relies out of Dhragandhra, Gujarat, whereas Caustic Soda and PVC amenities are based mostly out of Sahupuram, Tamil Nadu.

Caustic Soda:

• Revenue for Q2FY23 stood at ₹2,791.0 Mn, in comparison with ₹1,247.6 Mn in Q2FY22. Revenue development of 123.7% on a YoY foundation.
• EBITDA for Q2FY23 stood at ₹920.8 Mn, in comparison with ₹17.8 Mn in Q2FY22 development of fifty.7x YoY.

Soda Ash:

• Revenue for H1FY23 stood at ₹1,734.4 Mn, in comparison with ₹917.2 Mn in H1FY22, a development of 89.1% YoY. Revenue development was supported by beneficial demand-supply dynamics and a beneficial pricing situation.
• EBITDA for H1FY23 stood at ₹271.4 Mn, in comparison with ₹40.1 Mn in H1FY22. EBITDA margins have proven a strong enchancment.

PVC:

• Revenue for H1FY23 stood at ₹5,527.0 Mn, in comparison with ₹5,614.7 Mn in H1FY22, degrowth of 1.6% YoY as a result of decrease realisation impression.
• EBITDA for H1FY23 stood at ₹ (284.5) Mn, in comparison with ₹636.1 Mn in H1FY22. Higher uncooked materials costs impacted the general margins. Once the high-cost stock is channelised, margins are anticipated to enhance from thereon.

About DCW

DCW is a speciality chemical substances Company manufacturing PVC, C-PVC (chlorinated polyvinyl chloride), Caustic Soda, Soda Ash, and Synthetic Iron Oxide Pigment (SIOP). The Company is the one home producer of C-PVC, a flexible thermoplastic used primarily for manufacturing scorching and cold-water pipes, industrial liquid dealing with, and a variety of merchandise serving quite a lot of purposes. DCW’s Caustic Soda, SIOP and PVC Units are in shut proximity to the Tuticorin Port in Tamil Nadu, giving the Company a aggressive edge over its friends to export its merchandise to world markets.

Safe Harbour: This doc could include forward-looking statements concerning the Company, that are based mostly on the beliefs, opinions, and expectations of the Company’s administration as of the date of this press launch, and the Company doesn’t assume any obligation to replace their forward-looking statements if these beliefs, opinions, expectations, or different circumstances ought to change, These statements should not the ensures of future efficiency and contain dangers and uncertainties which are tough to foretell. Consequently, readers mustn’t place any undue reliance on such forward-looking statements.

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