💰 Financial Performance

Revenue Growth by Segment

The company operates in a single primary segment: Trading in Dyes & Chemicals. Revenue from operations for Q2 FY26 reached INR 112.70 Cr, representing a growth of 26.7% YoY compared to INR 88.95 Cr in Q2 FY25. For the half-year ended September 2025, revenue grew 27.8% YoY to INR 228.13 Cr.

Geographic Revenue Split

Not specifically disclosed, though operations are concentrated in Bhilwara, Rajasthan, serving the regional textile and chemical hubs.

Profitability Margins

Net Profit Margin (NPM) for Q2 FY26 stood at 5.34%, a contraction from 7.30% in Q2 FY25. This decline is primarily due to a 22.6% increase in purchase costs and higher finance charges. Profit After Tax (PAT) for Q2 FY26 was INR 6.01 Cr, down 7.4% YoY from INR 6.50 Cr.

EBITDA Margin

EBITDA margin for Q2 FY26 was 7.33% (INR 8.26 Cr), down from 10.19% (INR 9.07 Cr) in Q2 FY25. The margin compression reflects tighter spreads in the chemical trading market and increased operational overheads.

Capital Expenditure

Property, Plant, and Equipment stood at INR 1.28 Cr as of September 30, 2025, compared to INR 1.05 Cr in March 2025, indicating a modest maintenance CAPEX of INR 0.23 Cr.

Credit Rating & Borrowing

Total borrowings as of September 30, 2025, were INR 18.60 Cr, comprising INR 17.61 Cr in short-term and INR 0.99 Cr in long-term debt. Finance costs increased 111% YoY to INR 19.42 Lakhs for the quarter, reflecting higher utilization of working capital limits.

⚙️ Operational Drivers

Raw Materials

The primary cost driver is 'Purchase of Stock in Trade' (Dyes and Chemicals), which accounts for 96.7% of total revenue (INR 109.05 Cr in Q2 FY26).

Capacity Expansion

As a trading entity, the company does not have traditional manufacturing capacity; however, it manages a high volume of inventory valued at INR 16.60 Cr to support its distribution network.

Raw Material Costs

Purchase costs for stock-in-trade were INR 109.05 Cr in Q2 FY26, up 22.6% YoY. Procurement strategies focus on bulk purchasing to maintain trading margins in a volatile chemical pricing environment.

Manufacturing Efficiency

Not applicable as the company is a trading entity; efficiency is measured by inventory turnover.

Logistics & Distribution

Distribution costs are integrated into 'Other Expenses' (INR 84.39 Lakhs), supporting the delivery of chemicals to regional industrial customers.

📈 Strategic Growth

Expected Growth Rate

27.80%

Growth Strategy

The company aims to achieve growth by expanding its trading portfolio within the dyes and chemicals sector and deepening its penetration in the Rajasthan textile market. The 27.8% H1 revenue growth suggests aggressive market share acquisition despite margin pressure.

Products & Services

Industrial Dyes and Chemicals used primarily in the textile processing and manufacturing industries.

Brand Portfolio

Shankarlal Rampal Dye-Chem Limited.

New Products/Services

Not specifically disclosed in the current reporting period.

Market Expansion

The company is focusing on strengthening its presence in the Bhilwara industrial cluster, which is a major hub for textile manufacturing in India.

Strategic Alliances

No new JVs or alliances reported; the company operates as a standalone entity with no subsidiaries.

🌍 External Factors

Industry Trends

The chemical trading industry is shifting toward organized players who can provide consistent supply and credit; SRD is positioning itself by maintaining a large balance sheet with INR 136.56 Cr in current assets.

Competitive Landscape

Competes with both unorganized local traders and larger national chemical distributors in the Rajasthan region.

Competitive Moat

The company's moat is built on its localized distribution network and long-standing relationships in the Bhilwara textile hub. This is sustainable due to the high cost for outside competitors to establish similar local logistics and credit trust.

Macro Economic Sensitivity

Highly sensitive to the textile industry's health and industrial chemical demand; a slowdown in textile exports would directly reduce demand for the company's dyes.

Consumer Behavior

Industrial demand is shifting toward eco-friendly dyes, which may require the company to adjust its product portfolio in the future.

Geopolitical Risks

Global chemical price volatility driven by geopolitical tensions can impact procurement costs and trading margins.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to chemical handling regulations and GST compliance for inter-state and intra-state trading.

Environmental Compliance

As a trader, the company has lower direct environmental compliance costs compared to manufacturers, though it must adhere to chemical storage and handling safety norms.

Taxation Policy Impact

The effective tax rate for Q2 FY26 was approximately 25.1%, with a current tax provision of INR 2.02 Cr on PBT of INR 8.03 Cr.

Legal Contingencies

No pending material litigation or court cases were disclosed in the financial notes.

⚠️ Risk Analysis

Key Uncertainties

The most significant risk is the high level of trade receivables (INR 93.26 Cr), which represents 83% of quarterly revenue. Any significant default by top clients would severely impact the company's equity base of INR 58.65 Cr.

Geographic Concentration Risk

High concentration in Rajasthan (Bhilwara), making the company vulnerable to regional economic downturns or state-specific policy changes.

Third Party Dependencies

Dependent on chemical manufacturers for consistent supply; any supply-side disruption would halt trading operations.

Technology Obsolescence Risk

Low risk of technology obsolescence as a trader, though digital transformation in procurement and inventory management is necessary for scaling.

Credit & Counterparty Risk

High credit exposure to textile units; the company's current ratio of 6.96x is heavily skewed by receivables, indicating potential liquidity constraints if collections slow down.