Duroply Indust. — Q2 FY26 earnings call

Call held 17 Nov 2025

Management summary

Duroply Industries reported strong Q2 FY26 results with significant revenue and profit growth, largely driven by contract manufacturing and its mid-segment brand 'Tower'. Despite a soft demand environment, the company outpaced industry growth and expects to maintain mid-teens revenue growth with improving margins in the coming quarters. Management is focusing on operational efficiencies, strategic marketing, and talent acquisition to drive premium product growth and achieve long-term targets.

Highlights

  • Revenue of ₹104.4 crores, up 15% YoY and 11.6% QoQ.

  • Profit Before Tax (PBT) of ₹2.67 crores, a 133% increase YoY.

  • EBITDA margin at 6.2%, up from 4.4% YoY and 5.8% QoQ.

  • Contract manufacturing revenue grew 49.4% YoY to ₹51.58 crores.

  • Mid-segment brand 'Tower' showed robust growth of 61% YoY.

  • Company targets mid-teens revenue growth (13-16%) for FY26 and FY27.

  • Gross Profit margin on in-house manufacturing is 44%, while contract manufacturing is 22%.

  • Annualized capacity expected to increase from ₹260 crores to ₹300-₹320 crores by mid-FY27 without major CapEx.

Key financials

2 periods

Headline

  • Revenue
    ₹104.4 Cr
    YoY +15% QoQ +11.6%
  • Profit Before Tax
    ₹2.67 Cr
    YoY +133%
  • Gross Margin
    34.8%
  • EBITDA
    ₹6.46 Cr
    YoY +61.5% QoQ +20%
  • EBITDA Margin
    6.2%

H1

  • Revenue
    ₹197.96 Cr
    YoY +12.7%
  • Profit Before Tax
    ₹4.55 Cr
  • Gross Margins
    34.8%
  • Employee Cost (% of sales)
    12%
  • Marketing Expenses (% of sales)
    2.5%
  • Finance Expenses (% of sales)
    2.3%
  • Debtor Holding Days
    44 days
  • Inventory Holding Period
    166 days
  • Creditors Day
    107 days
  • Cash Conversion Cycle
    103 days
  • Return on Capital Employed (annualized)
    9.8%

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

  • In-house manufactured goods (Q2 FY26)
    ₹52.8 Cr Revenue-6.1% YoY Growth6.8% QoQ Growth
  • Contract manufacturing (Q2 FY26)
    ₹51.58 Cr Revenue49.4% YoY Growth17.1% QoQ Growth
  • Duro segment (Q2 FY26)
    5% YoY Growth16% QoQ Growth
  • Tower segment (Q2 FY26)
    61% YoY Growth9% QoQ Growth
  • In-house manufactured goods (H1 FY26)
    ₹102.3 Cr Revenue-3.3% YoY Growth
  • Contract manufacturing (H1 FY26)
    ₹95.65 Cr Revenue37% YoY Growth
  • Duro products (H1 FY26)
    3.8% Growth
  • Tower products (H1 FY26)
    53% Growth
  • Gross Profit Margin - Contract Manufacturing
    22% Margin
  • Gross Profit Margin - Own In-house Manufacturing
    44% Margin

Capital allocation

high confidence
  • Capex Capex disclosed
    • Increase annualized capacity from ₹260 crores to ₹300-₹320 crores without major CapEx
    The factory is standing at about 68%-70% utilization and we are doing some rebalancing, continuous improvements, etc. So, without major CapEx, I think annualized capacity which stands at about ₹260 crores per annum can go up to about ₹300-₹320 crores. So, that's the focus on that side.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · High confidence 13%-16%
    Our revenue growth is for a mid-teens growth. So, anywhere in the range of 13%-16% is what we're aiming for this year and we're on track for that.

    — Mr. Akhilesh Chitlangia

  • Revenue Growth Revenue · FY27 · Medium confidence mid-teens
    Nishita, I think again a mid-teens growth and then another 0.5%-1% point improvement in the operating margins.

    — Mr. Akhilesh Chitlangia

Margin

  • EBITDA Margin Margin · Q4 FY26 · High confidence up to 6.5%
    And I think margin at about this 6% probably might even go up further to about 6.5% in the coming quarters, especially fourth quarter.

    — Mr. Akhilesh Chitlangia

  • Operating Margins Improvement Margin · FY27 · Medium confidence 0.5%-1% point
    Nishita, I think again a mid-teens growth and then another 0.5%-1% point improvement in the operating margins.

    — Mr. Akhilesh Chitlangia

Marketing

  • Total Marketing Spend (% of sales) Marketing · later in this year (FY26) · High confidence 3%-3.3%
    We expect our total marketing spend to be about 3%-3.3% of sales. So, there would be a slight uptick towards later in this year but not more than that.

    — Mr. Akhilesh Chitlangia

Capacity

  • Annualized Capacity Capacity · mid-FY27 · High confidence ₹300-₹320 crores

    From ₹260 crores today

    without major CapEx, I think annualized capacity which stands at about ₹260 crores per annum can go up to about ₹300-₹320 crores. So, that's the focus on that side. ... I think by mid of FY26 we should be in a position to be in that direction, yes. ... Sorry. Yes, mid of FY27.

    — Mr. Akhilesh Chitlangia

Long-term Growth

  • CAGR Long-term Growth · next 3-4 years · High confidence 15%
    Sourav, our aim is to grow at about 15% CAGR for the next 4 years, 3-4 years. 15%-18%, yeah. But let's take 15% on the safer side.

    — Mr. Akhilesh Chitlangia

Product Mix

  • Premium Segment Contribution Product Mix · next 2-3 years · Medium confidence 50%

    From 66% today

    But I think over the next 2-3 years the 66% of premium will eventually settle down at 50-50 simply because the base on the mid-segment is much lower.

    — Mr. Akhilesh Chitlangia

What to watch in Q3 FY26

Premium product offering growth

H2 FY26 / next quarter
Current In-house manufacturing revenue down 6.1% YoY in Q2 FY26
Target Improvement in H2 FY26

Why it matters

Crucial for improving in-house manufacturing revenue and overall profitability, as premium products have higher gross margins (44% vs 22% for contract manufacturing).

our own manufacturing goods are down this year because our premium product offering hasn't grown as aggressively as it should have. And that's one of the key reasons. So, I think in the second half of the year we'll see a big improvement on that side as the premium product offering starts to grow.

Risks & concerns

  • Soft demand environment

    medium

    The demand side has been soft in the first half of the year, though the company is growing faster than the industry average.

    Management acknowledged

  • Raw material price volatility (timber)

    medium

    India is short on timber, leading to inflationary pressures. Imported timber carries risks from USD fluctuations, global trade wars, and freight shipping costs.

    Analyst acknowledged

  • Underperformance of premium product offering

    medium

    Own manufacturing goods are down because the premium product offering hasn't grown aggressively, but management expects improvement in H2 FY26.

    Management acknowledged

Q&A highlights

8 direct
Reason for decline in own manufacturing and current capacity utilization Direct
our own manufacturing goods are down this year because our premium product offering hasn't grown as aggressively as it should have. And that's one of the key reasons. So, I think in the second half of the year we'll see a big improvement on that side as the premium product offering starts to grow. In Q2 there was some positive movement on the premium product side as compared to the first quarter. The factory is standing at about 68%-70% utilization...

Explains a key operational challenge and management's plan to address it, linking to premiumization strategy and current capacity usage.

Asked by Nishita

Timeline for capacity expansion without major CapEx Direct
I think by mid of FY26 we should be in a position to be in that direction, yes. ... Sorry. Yes, mid of FY27.

Provides a specific timeline for achieving higher capacity utilization and output without significant capital expenditure, indicating efficiency focus.

Asked by Nishita

Future marketing expense trajectory Direct
We expect our total marketing spend to be about 3%-3.3% of sales. So, there would be a slight uptick towards later in this year but not more than that.

Clarifies the company's marketing strategy and expected spend, indicating a slight increase from current levels but below historical highs to support growth.

Asked by Nishita

Revenue growth and margin sustainability guidance Direct
Our revenue growth is for a mid-teens growth. So, anywhere in the range of 13%-16% is what we're aiming for this year and we're on track for that. And I think margin at about this 6% probably might even go up further to about 6.5% in the coming quarters, especially fourth quarter.

Provides clear short-term guidance on top-line and profitability, crucial for investor modeling and understanding management's outlook.

Asked by Nishita

Indian plywood industry growth rate and Duroply's target Direct
the industry is currently growing at 5%-5.5%, maybe 6%. So, that's the growth rate that the overall industry is at. I think this growth rate would stick to maybe 6%-7% in the coming years. We are looking to grow at about double the industry growth rate. I mean, 2.5X-3X the industry growth rate. So, if we take 5% as the industry growth rate, then we are on track to grow at about 15%.

Benchmarks Duroply's growth ambition against the broader industry, highlighting its market share gain strategy and confidence in outperforming the sector.

Asked by Sourav Khara

Raw material price volatility risk Direct
India is overall short on timber and that is one of the major inflationary pressures we have faced. Currently, raw material in India from timber is coming from plantations, farmer plantations, happening in various parts of the country and also from imported timber. So, imported timber or imported raw material, that has a risk on the US dollar side and how global trade wars develop and the freight shipping industry how that develops.

Identifies a key input cost risk and its various drivers, including forex fluctuations and geopolitical factors, which could impact future margins.

Asked by Sourav Khara

Long-term growth plan (CAGR) and diversification strategy Direct
Sourav, our aim is to grow at about 15% CAGR for the next 4 years, 3-4 years. 15%-18%, yeah. But let's take 15% on the safer side. ... Not for another year, year and a half.

Sets a clear long-term growth target and indicates no immediate plans for diversification, signaling focus on core business expansion.

Asked by Sourav Khara

Premium vs. Mid-segment product mix and margin differences Direct
the premium segment currently stands at north of 50% but it's actually close to 66%. ... But I think over the next 2-3 years the 66% of premium will eventually settle down at 50-50 simply because the base on the mid-segment is much lower. ... Gross Profit margin on the contract manufacturing side stands at about 22% and the own in-house manufacturing stands about 44%.

Provides insight into the current and target product mix, and the significant margin differential between in-house (premium) and contract manufacturing (mid-segment), explaining the strategy to balance growth and profitability.

Asked by Nishita

2 min read 5 chapters

Detailed narrative

Strong Q2 FY26 Performance Driven by Contract Manufacturing and Mid-Segment

Duroply Industries reported a robust Q2 FY26 with revenue reaching ₹104.4 crores, marking a 15% year-on-year and 11.6% quarter-on-quarter growth. Profit Before Tax (PBT) surged by 133% year-on-year to ₹2.67 crores. This growth was significantly propelled by contract manufacturing, which saw a 49.4% year-on-year increase to ₹51.58 crores, and the mid-segment brand 'Tower', which grew by 61% year-on-year. The half-yearly revenue stood at ₹197.96 crores, up 12.7% YoY.

EBITDA Margin Expansion and Operational Efficiency Focus

The company's EBITDA for Q2 FY26 stood at ₹6.46 crores, a 61.5% increase year-on-year, with the EBITDA margin expanding to 6.2% from 4.4% in the same period last year. Management highlighted a focus on operational and strategic efficiencies, which contributed to this margin improvement. They anticipate further margin expansion to 6.5% in the coming quarters, particularly in Q4 FY26, and a 0.5%-1% point improvement in operating margins for FY27.

Strategic Product Mix Evolution and Capacity Enhancement

While in-house manufactured goods revenue declined by 6.1% year-on-year, the premium segment currently contributes about 66% of the product mix. The company aims for a 50-50 split between premium and mid-segment in 2-3 years, driven by the faster growth of the mid-segment. Current factory utilization is 68%-70%, with plans to increase annualized capacity from ₹260 crores to ₹300-₹320 crores by mid-FY27 without major CapEx, focusing on rebalancing and continuous improvements.

Marketing and Talent Investment for Future Growth

Marketing expenses for H1 FY26 were 2.5% of sales, down from 3.6% in H1 FY25. The company expects total marketing spend to be around 3%-3.3% of sales, with a slight uptick later in FY26, focusing on onboarding influencers and increasing manpower. This investment in talent and marketing is expected to drive growth in the premium segment and overall business, with employee costs currently at 12% of sales, which management expects to come down.

Positive Industry Outlook and Duroply's Ambitious Growth Targets

The Indian plywood industry is growing at 5%-6%, with expectations of 6%-7% in the coming years, supported by increased construction activities and urbanization. Duroply aims to grow at double the industry rate, targeting a 15% CAGR for the next 3-4 years. The implementation of quality control orders has restricted imports, creating a more favorable environment for domestic manufacturers, and the company does not plan diversification for another year to year and a half.

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