Kiri Industries finalized the sale of its entire 37.57% stake in DyStar Global Holdings for USD 689 million (approximately ₹6,200 crore), resolving a protracted 10-year legal tussle overseen by Singapore courts. Net proceeds after taxes and legal costs exceed ₹5,200 crore, far surpassing the company’s market cap of around ₹3,700 crore. This windfall caps a saga that began with the 2010 acquisition of DyStar assets amid the global financial crisis.
Company Background and Key Milestones
Founded in 1998 as Kiri Dyes and Chemicals Private Limited in Ahmedabad, Gujarat, the firm pivoted to exports in 1999, targeting USA and Taiwan markets. Backward integration projects launched in 2005-2007 boosted capacity for vinyl sulphone and H-acid, earning awards like Two-Star Export House status. The pivotal 2010 DyStar asset acquisition via a joint venture with China’s Longsheng Group transformed it into a global dyes player, leading to its 2011 rebranding as Kiri Industries Ltd.
Recent Financial Performance
Q2 FY26 standalone revenue hit ₹194.62 crore, up 34% YoY and 8% QoQ, driven by dyes intermediates and chemicals demand, though consolidated revenue reached ₹213.44 crore with 23% YoY growth. Profitability suffered from DyStar litigation costs, posting EBITDA losses of ₹9.92 crore standalone and ₹13.05 crore consolidated, alongside negative EPS. H1 FY26 showed revenue of ₹375-415 crore but net losses due to elevated expenses and finance costs.
Strategic Reinvestment Ahead
Over 90% of net funds will fuel import substitution in fertilizers and metals, including copper projects via subsidiary Indo Asia Copper Limited. Chairman Manishkumar Kiri targets IRR above 30% with 3-4 year paybacks, aligning with diversification from dyes. Board and shareholder nods remain pending for these high-growth bets.
Dividend Stance and Market Response
Promoters ruled out substantial dividends, eyeing just 10% for possible shareholder payout, fueling stock sell-offs. Shares dipped amid valuation worries, trading near ₹624 despite the cash influx representing 160%+ of market cap. Transparency on capex versus other uses stays a key investor concern.
Valuation and Outlook
Precedents of revenue volatility and losses highlight execution risks, yet the cash pile bolsters balance sheet for ambitious expansions. At current multiples, the stock appears premium-priced pending project delivery. Success in new sectors could redefine Kiri’s trajectory post-DyStar exit.
Mr. Nadim Abbas M G is an Intermediate Chartered Accountant with a strong background in Information Technology. He combines his expertise in IT with a deep understanding of the stock market, making him a valuable resource for both financial and technical insights. With hands-on experience in accounting, IT systems, and stock market analysis, Nadim excels in bridging the gap between finance and technology, offering strategic advice and expert guidance in both domains.
