1. At a Glance
Q1 FY26 for Shankar Lal Rampal Dye-Chem (SRD) was like its dyes – colorful top line, pale bottom line. Revenue ₹122.3 Cr (+23.8% YoY), PAT ₹4.24 Cr (+21.8% YoY, +68% QoQ), but margins still stuck below 5%. P/E 42 at ₹80 screams pricey for a trader.
2. Introduction
Imagine buying paint thinking it’s premium, but it barely covers the wall. That’s SRD’s profitability. While revenue surged, OPM only crept to 4.6%, and ROE 10.9% makes it look like an average trading firm wearing an expensive suit.
3. Business Model (WTF Do They Even Do?)
SRD trades dyes and chemicals – imports, exports, domestic supply. Also offers chemicals on commission. Zero manufacturing moat, high dependency on third-party suppliers, and competition is fierce like Holi in North India.
4. Financials Overview
Q1 FY26 Snapshot:
- Revenue: ₹122.3 Cr (+24% YoY, from ₹98.7 Cr)
- Operating Profit: ₹5.67 Cr (OPM 4.6%)
- PAT: ₹4.24 Cr (+22% YoY, +68% QoQ from ₹2.52 Cr)
- EPS: ₹0.66
Verdict: Revenue runs, profit jogs, valuation sprints.
5. Valuation – What’s This Stock Worth?
At CMP ₹80.8, P/E 42, P/B 4.7 – this is luxury pricing for a commodity trader. Using FY26E EPS ~₹2, a fair value range is ₹50–₹60. The market is buying the dream, not the numbers.
6. What-If Scenarios
- If backward integration works: Margins jump, EPS hits ₹3+, stock could stay >₹90.
- If expansion fails: Margins remain flat, stock drifts to ₹50.
- If global dye demand spikes: Revenue scales, but trading spreads cap profits.
- If raw material costs rise: Margins vanish faster than cheap color in rain.
7. What’s Cooking (SWOT Analysis)
Strengths: Revenue growth, export network, upcoming backward integration.
Weaknesses: Low margins, trading nature, high P/E.
Opportunities: New plant to add manufacturing edge, margin expansion.
Threats: Commodity pricing, regulatory checks, demand volatility.
8. Balance Sheet 💰
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| Assets | 110 | 106 | 129 |
| Net Worth | 92 | 99 | 110 |
| Debt | 16 | 6 | 18 |
| Liabilities | 2 | 1 | 1 |
Debt small, but reserves aren’t growing rapidly.
9. Cash Flow (FY23–FY25)
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| Ops | 15 | 6 | -13 |
| Investing | -6 | 0 | 0 |
| Financing | -11 | -6 | 10 |
| Net Cash | -10 | -5 | -2 |
Operating cash is negative – a big red flag for sustainability.
10. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE (%) | 12 | 11 | 10.9 |
| ROCE (%) | 22 | 9 | 14.1 |
| PAT Margin (%) | 3 | 4 | 4.1 |
| D/E | 0.16 | 0.06 | 0.16 |
ROE is low, and D/E spiked back with debt for expansion.
11. P&L Breakdown – Show Me the Money
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 323 | 288 | 402 |
| EBITDA | 22 | 9 | 16 |
| PAT | 16 | 6 | 11 |
Revenue recovering, profit inconsistent.
12. Peer Comparison
| Company | P/E | ROE% | OPM% | PAT Qtr Cr |
|---|---|---|---|---|
| Shankar Lal Rampal | 42.2 | 10.9 | 4.6 | 4.24 |
| Vinyl Chemicals | 28.4 | 15.6 | 4.1 | 7.27 |
| Shiv Texchem | 12.4 | 18.3 | 3.9 | 27.5 |
SRD is the priciest among peers with the weakest moat.
13. EduInvesting Verdict™
Shankar Lal Rampal is growing revenue but still trades like a commodity business. Valuation is expensive, margins thin, and cash flows weak. Backward integration is the only trigger that can justify current prices.
For now, it’s a colorful story with faded profitability.
Written by EduInvesting Team | 28 July 2025
Tags: Shankar Lal Rampal Dye-Chem, Q1 FY26, ₹122 Cr Revenue, ₹4.2 Cr PAT, EduInvesting Premium
