DCW Q2 CONCALL: EXPECTS DOUBLE-DIGIT EBITDA MARGINS IN H2, TARGETS ₹2,500 CR+ REVENUE POTENTIAL AT CURRENT PRICES; ₹250 CR SIOP & POWER CAPEX, ₹40 CR BUYBACK & 40% SIOP MARGIN OUTLOOK

• H2 FY27 Outlook: Management expects significantly stronger performance during H2 FY27, supported by normalization of PVC and CPVC spreads, higher specialty chemical volumes and improved product mix. • H2 EBITDA Margin Guidance: Management expressed confidence in achieving double-digit EBITDA margins during H2 FY27, compared with 8.2% reported in Q2. • FY27 EBITDA Guidance: Management had earlier communicated an EBITDA expectation of approximately ₹300 Cr but refrained from reaffirming a specific full-year number due to geopolitical disruptions, abnormal freight costs and volatile chemical prices. • Revenue Potential: Management indicated that annual revenue at current product prices and higher capacity utilization could reach approximately ₹2,500 Cr or more. • Revenue Comparison: Management clarified that approximately 30% of internally produced PVC is now consumed in CPVC production, reducing external PVC sales compared with previous years. • Specialty Chemicals Growth Strategy: Management intends to increase the contribution of differentiated specialty products while maintaining cost competitiveness in basic chemicals. • Capital Expenditure Plan: Company has initiated its previously announced ₹250 Cr investment programme covering synthetic iron oxide pigment capacity expansion and captive power infrastructure optimization. • SIOP Capacity Expansion: Management plans to increase synthetic iron oxide pigment capacity from approximately 30,000 TPA to 45,000 TPA through phased expansion. • SIOP Phase 1: Initial expansion will add approximately 7,000 TPA of pigment capacity, along with related steam and power efficiency improvements. • SIOP Phase 2: The subsequent phase will add another approximately 8,000 TPA, taking total capacity to 45,000 TPA. • SIOP Commissioning Timeline: Management expects the additional capacity to become available around Q4 FY28. • SIOP Capacity Ramp-Up: Management expects incremental volumes to ramp up over approximately 6–12 months following commissioning, with a faster ramp-up of around six months considered possible. • SIOP Customer Validation: Management believes ramp-up could be faster than earlier expansions because the products are already established with major customers, reducing the need for lengthy validation. • SIOP EBITDA Margin Outlook: Management expects synthetic iron oxide pigments to sustain margins of approximately 40%, supported by product differentiation and established customer relationships. • SIOP Investment Payback: Management expects the announced investments to achieve a payback period of approximately 3–4 years. • SIOP Realization Outlook: Management indicated average synthetic iron oxide pigment realizations of approximately $900–950 per tonne, depending on contract terms. • SIOP Volume Outlook: Management indicated annual volumes of approximately 25,000–26,000 tonnes, compared with around 10,000–12,000 tonnes in earlier years. • SIOP Capacity Utilization: Management indicated that approximately 80–85% utilization is effectively close to optimal because of production changeovers across different pigment colors and customer specifications. • SIOP Export Challenges: Elevated ocean freight costs to North America adversely affected profitability during Q2. • Pigment Freight Impact: Management estimated approximately ₹7–8 Cr of additional freight expenses compared with normal quarterly levels. • Pigment Demand Outlook: Management expects continued opportunities across paints, coatings, construction and concrete applications. • CPVC Capacity: Company has expanded CPVC manufacturing capacity to 50,000 TPA, following multiple phases of expansion from its original 10,000 TPA base. • CPVC Utilization Outlook: Management expects CPVC production to return toward full utilization after temporary volume shortfalls during Q2. • CPVC Q2 Production: Management indicated that output was approximately 500–600 tonnes below the expected level due to internal operational factors. • CPVC Margin Recovery: Management expects the PVC-to-CPVC pricing mismatch to correct progressively as earlier low-priced contracts are completed. • CPVC Spread Outlook: Management expects CPVC-PVC spreads to recover toward Q1 FY27 levels during Q3, subject to market conditions. • CPVC Spread Guidance: Management indicated that the earlier PVC-to-CPVC spread was approximately ₹25–30, while the Q2 compression was caused by rising PVC input prices and delayed CPVC price adjustments. • CPVC Price Outlook: Management indicated that prevailing CPVC prices were above approximately ₹125, although it did not provide a firm future realization target. • CPVC Pricing Mechanism: Most volume agreements are priced monthly, creating a lag when PVC input costs change sharply during the contract period. • CPVC Demand Outlook: Management expects seasonal demand to improve after the monsoon, supported by plumbing and infrastructure applications. • CPVC Profitability Impact: Management estimated an approximately ₹12–13 Cr adverse impact on profitability from the exceptional PVC-CPVC spread compression during Q2. • PVC-VCM Spread Recovery: Management indicated that spreads improved from below $50 per tonne in Q1 to above $100 per tonne during Q2. • October PVC Spread: Management indicated that the PVC-VCM spread had improved further to approximately $120 per tonne. • PVC Spread Outlook: Management expects the spread to move toward approximately $130–135 per tonne over the coming months, subject to market conditions. • PVC Selling Prices: Management indicated prevailing PVC prices of approximately $940–960 per tonne. • PVC Demand Outlook: Management expects domestic demand to remain healthy, supported by infrastructure, water supply and government-related applications. • PVC Import Competition: Higher shipping costs and increased export prices from Chinese suppliers have supported domestic PVC realizations. • PVC Countervailing Duty: Management indicated that a recommendation concerning countervailing duties on Chinese PVC imports was awaiting Ministry of Finance approval. • PVC Duty Outlook: Management believes implementation could improve competitive conditions for domestic manufacturers, although the final pricing benefit will depend on freight and international PVC prices. • Basic Chemicals Outlook: Management expects profitability to benefit from improving PVC spreads, higher caustic soda volumes and recovery in synthetic rutile sales. • Basic Chemicals Expansion Strategy: Management does not currently plan major capacity expansion in commodity chemicals, preferring efficiency improvements and specialty chemical investments. • Synthetic Rutile Outlook: Management expects a higher contribution from Japanese customers beginning in Q3 FY27. • Japanese Customer Sales: Management indicated that deliveries under the Japanese customer arrangement began during Q2, with higher volumes expected in subsequent quarters. • Synthetic Rutile Margins: Management expects an improvement in product mix as Japanese customer sales increase because these contracts carry higher spreads. • Soda Ash Production: Management indicated that flooding at its Dhrangadhra facility caused approximately 10 days of plant stoppage, followed by additional restart time. • Soda Ash Utilization: Company had been operating near 90% utilization before the flood-related disruption. • Captive Power Optimization: The announced investment programme includes improvements to cogeneration infrastructure to increase steam availability and reduce steam and power costs. • Renewable Power Strategy: Management clarified that the current power optimization capex does not involve additional renewable energy capacity. • Solar Power Expansion: Management is awaiting clarity on Tamil Nadu's renewable energy regulatory framework and related legal proceedings before deciding on further investments. • Existing Renewable Power: Management indicated that renewable electricity has substituted approximately 25% of relevant power requirements. • Solar Power Savings: Management estimated that its earlier solar investment could generate approximately ₹25–30 Cr of annual savings relative to power costs prevailing when the project was approved. • Energy Cost Pressure: Higher coal and lignite prices have offset part of the benefit from renewable power, keeping absolute power expenses elevated. • Buyback Announcement: Board approved an open-market share buyback of up to ₹40 Cr, subject to applicable regulations and execution. • Buyback Equity Reduction: Management indicated that full execution could reduce the company's equity share base by slightly less than 3%. • Buyback Capital Allocation: Management intends to balance shareholder returns with investments in specialty chemicals and operational efficiency. • Future Buyback Outlook: Management indicated that additional buybacks could be evaluated in the future, without making any commitment. • Finance Cost Guidance: Management expects FY27 finance costs to decline approximately 9–10% compared with FY26. • Q2 Finance Costs: Finance costs declined approximately 8% QoQ and 12.5% YoY to ₹13.6 Cr. • Interest Rate on New Borrowings: Management indicated a weighted average borrowing cost of approximately 9–9.25% for recently raised funds. • Growth Capex Funding: Management plans to borrow approximately ₹150 Cr toward its ₹250 Cr investment programme, with ₹50 Cr already borrowed and placed in liquid investments. • Liquidity Strategy: Management intends to maintain cash equivalent to approximately 5–6% of annual revenue as a financial buffer. • Net Debt Position: Company reported net debt of approximately ₹26 Cr as of September 2026. • Net Debt to EBITDA: Net debt to trailing 12-month EBITDA stood at approximately 0.12x. • Cash & Investments: Cash equivalents, fixed deposits and mutual fund investments totaled approximately ₹297 Cr. • Gross Borrowings: Total debt stood at approximately ₹323 Cr, with gross debt to trailing 12-month EBITDA at approximately 1.5x. • Tax Rate Outlook: Company has moved to the new income tax regime from April 1, 2026, with an effective tax rate of approximately 25.17%, excluding deferred tax adjustments. • Q1 Deferred Tax Adjustment: Management indicated that the tax regime change resulted in an approximately ₹34 Cr deferred tax-related income adjustment during Q1 FY27. • Q2 Revenue Performance: Revenue from operations increased 23% YoY and 22% QoQ to ₹663 Cr. • Q2 EBITDA Performance: Management-reported EBITDA, including other income, stood at ₹55 Cr, up 32% QoQ but down 13% YoY. • Q2 EBITDA Margin: Management-reported margin stood at approximately 8.2%. • Basic Chemicals Performance: Segment EBITDA recovered to ₹20 Cr from a loss of ₹14 Cr QoQ, supported by improved PVC spreads and synthetic rutile volumes. • Specialty Chemicals Revenue: Segment revenue increased approximately 32% YoY and 4% QoQ, primarily driven by higher CPVC volumes. • Specialty Chemicals Profitability: Segment EBITDA declined approximately 33% YoY, affected by CPVC spread compression and higher North American export freight. • Basic Chemicals Revenue: Segment revenue increased approximately 20% YoY and 31% QoQ. • H1 Revenue Performance: Revenue from operations increased approximately 19% YoY to ₹1,205 Cr. • H1 EBITDA Performance: Management-reported EBITDA, including other income, declined approximately 20% YoY to ₹96 Cr. • H1 Segment Growth: Specialty Chemicals revenue increased approximately 35% YoY, while Basic Chemicals revenue increased approximately 13%. • H1 Finance Costs: Finance costs declined approximately 7.2% YoY to ₹28.4 Cr. • Key Challenges: Volatile PVC and CPVC spreads, elevated freight and fuel costs, Chinese import competition, weather-related operational disruptions, uncertain commodity prices and the timing of specialty chemical margin recovery remain important factors.

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