At a Glance
Vinyl Chemicals (India) Ltd (VCIL) pulled a Q1 FY26 net profit of ₹4.45 Cr, down from ₹7.27 Cr last quarter, on sales of ₹151 Cr. Margins collapsed to 1.3%, and the stock is stuck at ₹296 like a vinyl record skipping a beat. With ROCE at 21%, ROE at 16%, and P/E 25x, the company screams “stable trader” but not “growth darling.”
Introduction
This is not your adrenaline-pumping growth stock. VCIL basically imports Vinyl Acetate Monomer (VAM) and sells it. Its biggest customer? Pidilite, which also happens to own 40.6% of it. So, if Fevicol is happy, VCIL is happy. If Fevicol sneezes, VCIL catches pneumonia. The latest numbers show muted topline, wafer-thin margins, and investors yawning.
Business Model (WTF Do They Even Do?)
- Business: Pure trading of VAM – no manufacturing, no magic.
- Revenue Driver: Imports and resale of VAM to domestic customers (mainly Pidilite).
- Moat: Monopoly in being Pidilite’s key supplier.
- Limitation: Heavily dependent on global VAM prices and Pidilite demand.
Basically, a middleman with a listed price tag.
Financials Overview
Q1 FY26
- Revenue: ₹151.2 Cr (-12% QoQ)
- EBITDA: ₹1.97 Cr (OPM 1.3%)
- PAT: ₹4.45 Cr (-39% QoQ)
- EPS: ₹2.43
FY25 Recap
- Revenue: ₹625 Cr
- PAT: ₹22 Cr
- ROE: 15.6%
- Dividend Payout: 55% (juicy but unsustainable if profits dip further)
Comment: Sales fell, margins collapsed, but dividends keep flowing.
Valuation
- P/E Method
- EPS (TTM): ₹11.9
- Industry P/E: ~20x
- Fair Value ≈ ₹11.9 × 20 = ₹238
- P/B Method
- BV: ₹69
- P/B ~4.3x
- Fair Value ≈ ₹200–₹250
- DCF:
- With low growth, fair value around ₹230–₹260
🎯 Fair Value Range: ₹230 – ₹260
CMP ₹296 is slightly overpriced.
What’s Cooking – News, Triggers, Drama
- Trigger: Any rise in global VAM prices can improve spreads.
- Drama: Dependent on one customer (Pidilite).
- Buzz: Insider trading code amended – no biggie for fundamentals.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 262 |
| Liabilities | 135 |
| Net Worth | 125 |
| Borrowings | 0 |
Remark: Clean balance sheet, no debt – a trader with cash discipline.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating | -20 | 36 | 24 |
| Investing | 40 | -14 | -6 |
| Financing | -19 | -18 | -12 |
Remark: Positive operating cash now, but trading swings can ruin it quickly.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 16% |
| ROCE | 21% |
| P/E | 25x |
| PAT Margin | 3% |
| D/E | 0.0 |
Remark: Margins are thinner than papad.
P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 1,013 | 597 | 625 |
| EBITDA | 47 | 25 | 26 |
| PAT | 36 | 22 | 22 |
Remark: Sales volatility, profit stagnation.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Shiv Texchem | 2,202 | 48 | 12x |
| Shankar Lal | 425 | 12 | 43x |
| Vinyl Chem | 621 | 22 | 25x |
Remark: Priced higher than peers with similar growth. Investors are paying for Pidilite’s shadow.
Miscellaneous – Shareholding, Promoters
- Promoters (Pidilite): 50.4%
- FIIs: Nil
- DIIs: Nil
- Public: 49.6%
Observation: High promoter stake, low institutional interest – retail drives sentiment.
EduInvesting Verdict™
Vinyl Chemicals is a Pidilite satellite: stable, boring, dividend-paying. Its profits depend on commodity spreads, not innovation. While debt-free and efficient, its growth is limited and valuations are stretched.
SWOT Quickie
- Strengths: Pidilite support, no debt, steady dividends.
- Weaknesses: Single-customer reliance, wafer-thin margins.
- Opportunities: Global VAM demand revival, margin uptick.
- Threats: Price volatility, imports dependency, currency risk.
Final Word: A safe trader with limited upside. Good for dividend hunters, not thrill-seekers.
Written by EduInvesting Team | 30 July 2025
SEO Tags: Vinyl Chemicals Q1 FY26 Results, Pidilite Subsidiary Stock Analysis, Vinyl Acetate Trading Company
