Duroply Indust. — Q1 FY26 earnings call

Call held 4 Aug 2025

Management summary

Duroply Industries reported a mixed Q1 FY26, achieving double-digit revenue growth year-on-year and significant PBT and EBITDA improvement, driven by better operating leverage. However, demand was muted, particularly in the premium segment due to regional challenges, and the cash conversion cycle worsened. The company is focused on operational efficiencies, digital transformation, and optimizing working capital while targeting higher margins and ROCE in the coming years.

Highlights

  • Revenue stood at ₹93.5 crores, marking a 10.3% YoY growth, despite a 15% QoQ decline.

  • Profit Before Tax (PBT) increased by nearly 50% YoY to ₹1.88 crores.

  • EBITDA for the quarter was ₹5.39 crores, a 31% increase YoY, with EBITDA margin at 5.8% of sales.

  • Volume growth in Q1 FY26 was approximately 9%.

  • The mid-segment brand tower showed robust growth of 45% YoY, while the premium 'Duro' segment grew 2% YoY but declined 18% QoQ.

  • Cash conversion cycle is a concern, with creditor days increasing to 170 days from 90 days in Q4 FY25, though debtor days improved to 44 days from 47 days last year.

  • The company aims for FY27 EBITDA margins in the range of 6.5-7% and ROCE of 9-12% for FY26.

Key financials

  1. Revenue ₹93.5 Cr +10.3%YoY
  2. Profit Before Tax ₹1.88 Cr +50%YoY
  3. Gross Margin 34.1% 0%YoY
  4. EBITDA ₹5.39 Cr +31%YoY
  5. EBITDA Margin 5.8% +20.8%YoY
  6. Volume Growth 9%

What they filed

Q1 FY27: revenue up 6.5%, net profit down 60.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue91 90 106 94 104 +15%93 +4%112 +5%100 +6%
EBITDA4 4 5 5 6 +61%5 +23%5 −10%4 −15%
Net profit1 1 3 2 2 +382%1 +17%-2 −190%1 −61%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentGrowthDegrowth
Duro Segment (Product Mix)2%-18%
Mid-Segment Brand Tower (Product Mix)45%-5.5%

Capital allocation

medium confidence
  • Liquidity Liquidity disclosed The company has sufficient liquidity and warrants due to convert within the next month or so.
    The company has sufficient liquidity for this and we also have warrants that were due to convert coming... that will be converted within the next month or so.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · FY27 · High confidence 6.5-7%
    Our target margins for FY27, it would be in the range of 6.5 – 7 %. That's what we are aiming for. 6.5% would be the bare minimum that we would be looking to do.

    — Mr. Akhilesh Chitlangia, MD & CEO

  • ROCE Profitability · End of this year (FY26) · Medium confidence Double digits
    In terms of ROCE, our aim for ROCE is to hit double digits by end of this year. Anywhere between 9% to 12% is the ROCE aim that we are looking for.

    — Mr. Akhilesh Chitlangia, MD & CEO

  • ROCE Profitability · FY26 · High confidence 9-12%
    The ROCE margin for this FY26 is anywhere in the range of 9% to 11% or 9% to 12%, sorry.

    — Mr. Akhilesh Chitlangia, MD & CEO

Marketing Spend

  • Marketing Spend as % of Sales Marketing Spend · This year (FY26) · Medium confidence ~3.5%
    Our marketing spend this year will be at about 3.5% of sales on overall average and over the years, that will start coming down as the revenue starts going up further.

    — Mr. Akhilesh Chitlangia, MD & CEO

Growth

  • Growth Rate Growth · Next 3-4 years · Medium confidence 15-16%
    If we want to grow at 15% to 16% consistently over the next 3, 4 years, employee cost will be one of the major factors which will be under pressure because we are also having to recruit better quality people and retain our star performers.

    — Mr. Akhilesh Chitlangia, MD & CEO

Capacity Utilization

  • Rajkot Plant Utilization Capacity Utilization · Sometime this year (FY26) · High confidence 85%

    From 70% today

    For our main plant, Rajkot, currently we are at about a 70 % utilization. That can go up to about 85% without an issue. So, there is some headroom over there. And we are working on getting to that capacity by sometime this year.

    — Mr. Akhilesh Chitlangia, MD & CEO

What to watch in Q2 FY26

Premium Segment Demand Recovery

Next quarter
Current Slowdown in Q1 FY26 due to North India situation
Target Continued growth and recovery, building on July's positive trend

Why it matters

Recovery in the premium segment is crucial for overall revenue growth and profitability, as it was a key drag in Q1.

I think the premium segment will start growing again, the July numbers are in already.

Risks & concerns

  • Demand slowdown in premium segment

    medium

    Demand was challenging, especially in the premium product range, impacted by the 'war situation' in North India, which is a strong market for the company.

    Management acknowledged

  • Overall muted demand

    medium

    The first quarter was challenging with muted demand across the board.

    Management acknowledged

  • Increasing cash conversion cycle

    medium

    The cash conversion cycle is increasing, primarily due to higher creditor days (170 days in Q1 FY26 vs 90 days in Q4 FY25), which management views as a matter of concern.

    Both acknowledged

  • Employee cost pressure

    low

    Employee costs are expected to be slightly higher due to the need to recruit and retain quality talent for consistent growth.

    Management acknowledged

Q&A highlights

7 direct
Timber cost and pricing strategy Direct
Udit, our timber cost largely remained flat. For our in-house manufacture, we are dependent on imports, not so much on domestic timber and on imports, we did not see any price escalation. However, in Q2, in the domestic procurement market, there are rumours of a cost increase happening.

Clarifies the company's raw material sourcing strategy (imports vs domestic) and provides an outlook on timber costs, which are crucial for margins.

Asked by Udit Gajiwala

Slowdown in premium segment and its drivers Direct
So, yes, one was the situation in North India, that definitely had a part to play and the premium segment largely goes to the HNI segment, where a lot of bungalows are constructed... I think the premium segment will start growing again, the July numbers are in already.

Explains the specific regional and customer segment factors impacting premium product demand and indicates a potential recovery based on recent data.

Asked by Udit Gajiwala

Impact of unorganized competition and QCO norms Direct
More than that, I think the challenge is going to come with the implementation of the QCO norms by BIS. A lot of imported material that used to come into the country, that has not happened over the last quarter. That will actually help the branded segment, which will also help the unorganized segment because the unorganized segment was facing tremendous pressure on selling because of these imports.

Highlights a significant regulatory change (QCO norms) that is expected to benefit both organized and unorganized sectors by curbing cheap imports, thus improving the competitive landscape.

Asked by Udit Gajiwala

Volume growth in Q1 Direct
Volume growth was about 9 odd %.

Provides a key quantitative metric for business performance, indicating underlying demand trends.

Asked by Ms. Jayshree Bajaj

Digitization and automation initiatives Direct
So, Jayshree, we recently have adopted a new Salesforce application and using that for better tracking of our sales team and getting them to be more effective on ground. We are also automating a lot of our backend processes to reduce manual intervention.

Details the company's strategic investments in technology to improve sales force effectiveness and operational efficiency, which can drive future growth and profitability.

Asked by Ms. Jayshree Bajaj

EBITDA margin improvement and FY27 target Direct
So, Shreyansh, if you see our EBITDA margins have been continuously improving quarter-on-quarter for the last 4 or 5 quarters... Our target margins for FY27, it would be in the range of 6.5 – 7 %.

Confirms a positive trend in profitability and provides a clear, quantifiable target for future EBITDA margins, crucial for investor valuation.

Asked by Shreyansh

Future growth, capacity utilization, and cash conversion cycle Direct
So for future growth, we've always maintained that our current aim is to be on an asset-light model. So we are working on establishing more capacities with contract manufacturers... The cash conversion cycle is increasing and it is a matter of concern.

Outlines the company's asset-light growth strategy, current plant utilization, and acknowledges a key working capital challenge, providing insight into operational priorities.

Asked by Harshad Singhania

3 min read 7 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Duroply Industries reported a revenue of ₹93.5 crores for Q1 FY26, demonstrating a 10.3% year-on-year growth. However, this represented a 15% sequential decline from the previous quarter. Profit Before Tax (PBT) saw a significant increase of nearly 50% year-on-year, reaching ₹1.88 crores. The company's EBITDA stood at ₹5.39 crores, up 31% from the same period last year, with an EBITDA margin of 5.8% of sales, compared to 4.8% in Q1 FY25 and 5.1% in Q4 FY25.

Segmental Performance and Product Mix

Revenue from in-house manufactured goods was ₹49.5 crores, remaining flat year-on-year but declining 17% quarter-on-quarter. Contract manufacturing revenue grew 24.9% year-on-year to ₹44.1 crores, though it saw a 5.5% quarter-on-quarter decline. In terms of product mix, the premium 'Duro' segment experienced a 2% year-on-year growth but an 18% quarter-on-quarter degrowth. Conversely, the mid-segment brand tower showed robust performance with a 45% year-on-year growth, despite a 5.5% quarter-on-quarter degrowth.

Operational Efficiency and Margin Analysis

Gross margin for Q1 FY26 was 34.1%, consistent with Q1 FY25 but slightly down from 34.9% in Q4 FY25. The improvement in profitability margins, particularly EBITDA, was attributed to better operating leverage. Employee costs increased to 11.9% of sales from 11% in Q1 FY25 and 9.5% in Q4 FY25, reflecting investments in talent. Marketing expenses were optimized, reducing to 2.2% of sales from 3.3% in Q1 FY25 and 4.2% in Q4 FY25.

Raw Material Costs and Procurement Strategy

Timber costs remained largely flat for in-house manufacturing, which relies on imports. Management noted that imported timber, on a landed cost basis, is slightly cheaper than domestic timber for their Rajkot plant due to inward freight costs from other regions. While there are rumors of a cost increase in the domestic procurement market for Q2 due to rains, the company expects timber costs to be reasonably moderated this year without significant shocks.

Market Dynamics and Competitive Landscape

The quarter was challenging due to muted demand, particularly in the premium segment, which was impacted by the 'war situation' in North India, a key market for HNI customers. However, the mid-segment continued to show strong growth. The implementation of Quality Control Order (QCO) norms by BIS is expected to benefit both organized and unorganized sectors by restricting imported materials, which previously put pressure on the unorganized segment. Management anticipates demand to move in the right direction, with organized sector potentially achieving faster growth due to rising per capita income.

Digital Transformation and Future Growth Strategy

Duroply is investing in digitization and automation, including the adoption of a new Salesforce application to enhance sales team tracking and effectiveness. Backend processes are also being automated to reduce manual intervention. The company maintains an asset-light growth model, planning to establish more capacities through contract manufacturers as demand increases. The Rajkot plant currently operates at 70% utilization, with a target to reach 85% utilization sometime this year.

Working Capital Management

The cash conversion cycle is increasing, which management acknowledged as a concern. Debtor turnover improved to 44 days from 47 days last year, and management expects further reductions. However, creditor days significantly increased to 170 days from 90 days in Q4 FY25, contributing to the worsening cash conversion cycle. The company's focus is on improving procurement terms by paying suppliers on time to secure better quality materials and pricing power.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Consumer Durables earnings calls