DEEPAKNTR

Eyes Relief from Dumping Pressures

is navigating margin pressure in its advanced intermediates segment, largely due to dumping of Diamino Stilbene Disulphonic Acid (DASDA) from China. The Directorate General of Trade Remedies (DGTR) has proposed a reference-price-based anti-dumping duty, which could offer relief. Alongside, rupee depreciation and backward integration efforts are expected to support margin recovery in the coming quarters. Segment Performance • Advanced Intermediates EBIT margin fell to 10.9% in Q3FY26, the weakest in 11 quarters. • Down from 16% in Q3FY25, driven by Chinese dumping. • Phenolics segment margin also declined to 2.3%, reflecting broader cost pressures. • Company is pursuing backward integration to reduce input costs and improve competitiveness. Regulatory Tailwinds • DGTR’s proposed reference price of $3,453/tonne for DASDA imports may curb dumping. • Rupee depreciation against the Chinese yuan adds a cost cushion for domestic producers. • These factors could aid EBIT margin recovery in Q4FY26 and Q1FY27. Valuation & Stock Performance • Stock has fallen over 50% from its peak of ₹3,169 (Aug 2024). • Trades at a P/E multiple of 26x FY27E EPS (Bloomberg consensus). • Despite high valuation, 44% EPS growth expected in FY27, but re-rating unlikely until margin recovery is visible. Outlook • Near-term: margin pressure persists, but regulatory support and integration efforts may stabilize performance. • Medium-term: sequential improvement expected, though valuation remains elevated. • Long-term: success hinges on cost control, policy support, and demand recovery in key segments.