DCW Limited

Basic Materials — Chemicals · NSE

₹45.00+₹0.22 (+0.49%)

DalalBaazaar Score

43 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Low

Driven by micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Nothing on this snapshot stands out as an immediate concern — the usual checks on business quality and management still apply.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:59 pm

Understanding the Business

Company site ↗

The 60-second version of DCW Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

DCW Limited engages in the manufacture and sale of heavy chemical products in India.

IndustryChemicals

SectorBasic Materials

Employees1,536

Annual revenue₹2,144 Cr

How does it make money?

Turns over ₹2,144 Cr a year. Of every ₹100 of sales, about ₹2 reaches shareholders as profit, with ₹11 left at the operating level before interest, tax and depreciation. Each of its 1,536 employees supports ₹1.40 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.40 Cr

Who are its competitors?

The closest listed comparisons in its industry are PIDILITE INDUSTRIES LTD, SRF LTD, UPL LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 9.9% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE15.4%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -18% while net margin moved -69% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect-18%

Margin effect-69%

DalalBaazaar Score

43/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 6.5% a year
✗ Profit has declined at 36.9% a year

Quality vs. Valuation

Company Quality

36/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

83/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

18.6x

3Y Median

46.2x

40 monthly readings · mean 68.9x · range 7.9x–188.8x

Sector Median

33.8x

median of 3 sector peers

🟢Current valuation is approximately 60% below its 3y median of 46.2x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 45% below the peer median of 33.8x.

vs. its own history

Cheap

46.2x median over 40 months · -60%

vs. sector peers

Cheap

33.8x median of 3 peers · -45%

vs. generic bands

Fair

15x–35x

EV/EBITDA

6.7x

PEG

—

What's Good / What's Bad

🟢 What's Going Well4

Debt is being paid down
Total debt is down 43% over 3 years.
Cash generation is improving
Free cash flow is up 99% over 3 years.
Very low debt
Debt/Equity of 0.27x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 18.7% to 4.5% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 25.2% to 9.9% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Significant margin compressionFinancial
EBITDA margin has fallen 5.4 points, from 16.6% to 11.2%.
🟡Profit is decliningFinancial
Net profit is down 75% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 43% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 60% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 45% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹278 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 16.6% to 11.2%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Returns on shareholder capital are falling
ROE has dropped from 18.7% to 4.5%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 9%✓ 11.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Interest cover stays above 3x✗ 2.2x
How much operating profit can fall before interest stops being comfortably covered.
3Free cash flow remains positive✓ ₹278 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✓ 9.9%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 4 neutral · 1 weak

Market Cap

₹1,328 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

18.6x

Fair

Fairly valued against the generic band

P/B Ratio

1.24x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹2.42

Profitable

Profitable on a per-share basis

ROE

4.5%

Weak

Weak capital efficiency

ROCE

9.9%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.27x

Low

Conservative leverage

Revenue Growth (YoY)

14.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

200.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.67%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹278 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

1.8%

Weak

Thin margins leave little room for error

Net Margin

3.2%

Average

Average bottom-line conversion

Current Ratio

1.01

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

-0.05

Defensive

Steadier than the market

52W Range Position

22%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

46.0 / 45.9

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

29.7

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,627 Cr	₹1,861 Cr	₹2,000 Cr	₹2,144 Cr	-6.5%
EBITDA	₹437 Cr	₹185 Cr	₹216 Cr	₹241 Cr	-18.0%
EBITDA Margin	16.6%	9.9%	10.8%	11.2%	—
PAT (Net Profit)	₹192 Cr	₹16 Cr	₹30 Cr	₹48 Cr	-36.9%
EPS	₹6.5	₹0.53	₹1.02	₹1.63	-36.9%
ROE	18.7%	1.5%	2.9%	4.5%	—
ROCE	25.2%	6.1%	8.1%	9.9%	—
Total Debt	₹508 Cr	₹439 Cr	₹427 Cr	₹290 Cr	-17.1%
Free Cash Flow	₹140 Cr	₹158 Cr	₹146 Cr	₹278 Cr	+25.8%

🔴 Revenue has shrunk at 6.5% a year over 3 years.

🔴 EBITDA has shrunk at 18.0% a year over 3 years.

🔴 EBITDA Margin has fallen from 16.6% to 11.2% over 3 years (-5.4 pts).

🔴 PAT (Net Profit) has shrunk at 36.9% a year over 3 years.

🔴 EPS has shrunk at 36.9% a year over 3 years.

🔴 ROE has fallen from 18.7% to 4.5% over 3 years (-14.2 pts).

🔴 ROCE has fallen from 25.2% to 9.9% over 3 years (-15.3 pts).

🟢 Total Debt has shrunk at 17.1% a year over 3 years.

🟢 Free Cash Flow has grown at 25.8% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,089 Cr

Total Liabilities

₹1,015 Cr

Cash & Equivalents

₹5 Cr

Operating Cash Flow

₹278 Cr

Capex

—

Shareholding (proxy)

Institutional Holding

3.7%

Insider Holding

50.5%

Corporate Actions

Dividend Rate

₹0.3

Ex-Dividend Date

18 Sept 2026

Peer Comparison

Company	P/E	ROE
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

2 positive2 mixed2 general

DCW Share Price Target 2026: Rs 57.9 Analyst Forecast

Univest, 18 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

DCW Ltd shareholders approve ₹0.20 dividend; all AGM resolutions pass

scanx.trade, 28 SeptCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Is It Smart To Buy DCW Limited (NSE:DCW) Before It Goes Ex-Dividend?

Simply Wall Street, 14 SeptCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

DCW Standalone March 2026 Net Sales at Rs 609.06 crore, up 13.23% Y-o-Y

Moneycontrol.com, 06 May

DCW Share Price Target 2027 to 2030: Analyst Outlook

Univest, 17 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

DCW Limited (NSE:DCW) May Have Run Too Fast Too Soon With Recent 27% Price Plummet

Simply Wall Street, 28 Jan

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

StrongFinancial Health · Valuation

WeakBusiness Quality · Growth · Profitability · Risk

Points for each in the Score ↑

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 1 high-severity red flag sits above this conclusion and should be read first.

1 of 5 tripwires tripped — Interest cover stays above 3x · see Key things to watch ↑