CRISIL said that the revision in outlook reflects subdue business risk profile with lower-than-expected revenue and sharp decline in operating margin. Though, it grown y-o-y 17.5% to Rs 302 crore during FY23, revenue remains range bound at Rs 250-300 crore during past five years ended FY23.

The company reported revenue of Rs 79 crore during Q1 FY24 against Rs 89 crore during Q1 FY23. Simultaneously, company witnessed sharp decline in operating margin from 32.44% in FY22 to 24.40% in FY23 and down trend continued during Q1 FY24 with operating margin of 9.72% backed by change in revenue mix. The ability of company to achieve steady revenue growth with healthy profitability will be key monitorable.

The rating reflects the extensive experience of promoters in the industrial chemical industry, and robust financial risk profile. These strengths are partially offset by working capital intensive operations and exposure to foreign exchange volatility and to changes in government regulations.

Vadodara- based Chemcon Speciality Chemicals is involved in manufacture of pharmaceutical intermediates and oilfield chemicals. The company has manufacturing facility based in Savli District. Vadodara.

The company reported 76.79% fall in net profit to Rs 5.91 crore on a 11.27% fall in sales to Rs 79.33 crore in Q1 FY24 over Q1 FY23.

The scrip rose 0.35% to currently trade at Rs 1346.75 on the BSE.