Duroply Indust. — Q3 FY26 earnings call

Call held 4 Feb 2026

Management summary

Duroply Industries reported a challenging Q3 FY26, primarily due to environment-related restrictions and construction bans in North India, impacting revenue and cash flows. Despite this, the company saw strong growth in its in-house manufactured goods segment and improved gross margins. Management expects a recovery in Q4 FY26, driven by easing restrictions and continued margin improvement, aiming for an FY26 EBITDA margin between 6% and 6.5%.

Highlights

  • Q3 FY26 Revenue stood at ₹93.05 crores, marking a 3.6% year-on-year growth but an 11% quarter-on-quarter decline.

  • Profit Before Tax (PBT) for Q3 FY26 was ₹1.37 crores, up by 13.7% compared to the same period last year.

  • Revenue from in-house manufactured goods grew by 11.6% year-on-year and 15% quarter-on-quarter to ₹60.7 crores in Q3 FY26.

  • Contract manufacturing revenue declined by 8.7% year-on-year and 37% quarter-on-quarter to ₹32.3 crores in Q3 FY26.

  • Gross margin improved to 37.1% in Q3 FY26, up from 34.2% last year and 34.8% last quarter.

  • EBITDA for Q3 FY26 was ₹5.4 crores, a 23.7% year-on-year increase, but a 16.4% quarter-on-quarter decrease.

  • EBITDA margin for Q3 FY26 was 5.8% of sales, compared to 4.9% last year and 6.2% last quarter.

  • For the nine months ended December 31, 2025, revenue was ₹291 crores, a 9.6% year-on-year increase, with profit at ₹5.92 crores (vs ₹3.6 crores last year).

Concerns

  • Environment-related restrictions and construction bans in North India (Delhi NCR)

Key financials

2 periods

Headline

  • Revenue
    ₹93.05 Cr
    YoY +3.6% QoQ -11%
  • Profit Before Tax
    ₹1.37 Cr
    YoY +13.7%
  • Gross Margin
    37.1%
    YoY +8.5% QoQ +6.6%
  • EBITDA
    ₹5.4 Cr
    YoY +23.7% QoQ -16.4%
  • EBITDA Margin
    5.8%
    YoY +18.4% QoQ -6.5%

9M

  • Revenue
    ₹291 Cr
    YoY +9.6%
  • Profit
    ₹5.92 Cr
  • Gross Margin
    35.3%
    YoY +1.7%

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

Share of Revenue (Q3 FY26)
₹93 Cr Total
  • In-house Manufactured Goods ₹60.7 Cr 65.3%
  • Contract Manufacturing ₹32.3 Cr 34.7%

Guidance & targets

Profitability

  • EBITDA Margin Profitability · FY26 · Medium confidence 6% to 6.5%
    We will be somewhere in that direction, between 6% to 6.5%.

    — Mr. Akhilesh Chitlangia

Volume

  • In-house vs. Contract Manufacturing Mix Volume · next financial year · Medium confidence 65:35
    Sorry, 60:40 ratio to improve slightly to 65:35 maybe next year, but it is too early for me to say.

    — Mr. Akhilesh Chitlangia

Revenue

  • Q4 Revenue Growth Revenue · Q4 FY26 · Low confidence slightly better
    Well, we expect the revenue to be slightly better in the 4th Quarter as well.

    — Mr. Akhilesh Chitlangia

Raw Material

  • Timber Prices Raw Material · foreseeable few months · Medium confidence stabilized, in this range for some time, no major hike or softening
    So, timber prices have stabilized, you're right. But I do not expect them to soften too much. I think they will be in this range for some time. ... But currently, for the foreseeable few months, I don't see a major hike or softening in the raw material prices for the plywood industry.

    — Mr. Akhilesh Chitlangia

Operations

  • Delhi NCR Operations Operations · Q4 FY26 onwards and Q1 next year · Medium confidence back on track
    But I think 4th Quarter onwards, and then Q1 next year, I think we should be back on track.

    — Mr. Akhilesh Chitlangia

What to watch in Q4 FY26

FY26 EBITDA Margin Achievement

Q4 FY26
Current 5.8% (Q3 FY26)
Target 6% to 6.5% (FY26)

Why it matters

EBITDA margin is a key profitability metric, and management expects improvement in Q4 to meet the annual target.

We will be somewhere in that direction, between 6% to 6.5%.

Risks & concerns

  • Environment-related restrictions and construction bans in North India (Delhi NCR)

    high

    Hampered Q3 performance, leading to 14-15 lost working days and impacting demand and channel partner cash flows.

    Management acknowledged

  • Competitive landscape in the branded plywood segment

    medium

    The branded plywood segment has become very competitive, posing challenges on volume.

    Management acknowledged

  • Tight financial liquidity in the building material space and channel partner credit tightness

    medium

    Financial liquidity has been tight from the channel partner side, and the company maintains credit discipline, impacting primary revenue growth.

    Management acknowledged

  • Volatility in raw material (timber) prices

    medium

    Timber prices are stabilized but fragile; potential for upward pressure due to wood veneer imports, weakening INR, and strengthening USD.

    Management acknowledged

Q&A highlights

7 direct
Traction on premium product segment and in-house manufacturing Direct
So, yes Nishita, there is a traction on the premium product segment. For this quarter alone, there was a big shift from our contract manufacturing to our in-house manufacturing. We had higher revenues from our in-house manufactured goods, which is a significant shift. On a quarter-on-quarter basis alone, the in-house manufacturing goods was up nearly 15%...

Confirms strategic shift towards higher-margin in-house production and premiumization is yielding results.

Asked by Ms. Nishita Shanlesha

FY26 EBITDA margin target vs. current performance Direct
We will be somewhere in that direction, between 6% to 6.5%.

Clarifies management's confidence in achieving the annual EBITDA margin target despite a lower Q3 performance.

Asked by Ms. Nishita Shanlesha

Drivers for Q4 FY26 EBITDA margin growth Direct
Well, we expect the revenue to be slightly better in the 4th Quarter as well. In Q3, we saw a significant challenge, especially in Noida, which is a core market, related to the pollution ban. So, there is that. Second is also our gross margins have started improving. And I think a combination of both will allow us to hit that number for the year.

Outlines the key factors (revenue growth, gross margin improvement, easing restrictions) expected to drive profitability in the next quarter.

Asked by Ms. Nishita Shanlesha

Future mix of in-house vs. contract manufacturing Direct
So, in-house manufacturing will continue to improve in the 4th Quarter as well. And for the next financial year, I think it's a little too early to say what would be the range, but we expect a 55:45 ratio mix to continue, which is what it currently is... Sorry, 60:40 ratio to improve slightly to 65:35 maybe next year, but it is too early for me to say.

Provides insight into the company's long-term strategy to increase the share of higher-margin in-house production.

Asked by Ms. Nishita Shanlesha

Impact of import scare on unorganized sector and company volumes Direct
So, the finish goods import that was coming… So now there is the QCO norms which have been implemented since February or March of this year. So, there is not much of imported goods that are coming into the industry currently. However, what has happened is that the unorganized sector has had a slight revival in the last quarter or so, in the last 5-6 months, on account of the cheap imports not coming. ... But the branded plywood segment has become a very competitive space right now. So, there are some challenges on volume, especially in terms of financial liquidity in the building material space overall, that has been a little tight from the channel partner side.

Explains the impact of regulatory changes on imports and the current competitive and liquidity challenges in the branded plywood market.

Asked by Mr. Ashvath Rajan

Outlook on timber prices and inflation Direct
So, timber prices have stabilized, you're right. But I do not expect them to soften too much. I think they will be in this range for some time. We have to also note that a lot of wood veneer that comes into the country today is coming from .... There is also the factor of the Indian rupee, you know, becoming weaker. And there might, as a result, the domestic wood timber prices could go up if the dollar continues to strengthen, and that would put, again, pressure on the raw material prices. So, it's very, very fragile and very difficult to say which way would it go. But currently, for the foreseeable few months, I don't see a major hike or softening in the raw material prices for the plywood industry.

Provides a detailed view on raw material cost outlook, highlighting stability but also potential risks from currency fluctuations and import dynamics.

Asked by Ms. Hena Mohra

Demand front, competitive pressures, and impact of Delhi NCR restrictions Direct
There are two parts to this. So, our tracking of tertiary or secondary sales shows that there is a higher movement of secondary sales over last year, significantly higher, but that's not relating into our primary revenue growth for the time being. One of the reasons for that is the credit tightness that we maintain with our channel partners. ... But I think 4th Quarter onwards, and then Q1 next year, I think we should be back on track.

Explains the disconnect between secondary sales and primary revenue due to credit discipline and the significant impact of Delhi NCR restrictions on demand and channel partner cash flows, with an outlook for recovery.

Asked by Ms. Hena Mohra

2 min read 5 chapters

Detailed narrative

Q3 FY26 Performance Overview

Duroply Industries reported a challenging Q3 FY26 with revenue at ₹93.05 crores, reflecting a 3.6% year-on-year growth but an 11% sequential decline. Profit Before Tax (PBT) for the quarter increased by 13.7% year-on-year to ₹1.37 crores. EBITDA stood at ₹5.4 crores, a 23.7% year-on-year increase, but a 16.4% quarter-on-quarter decrease, resulting in an EBITDA margin of 5.8% for the quarter. For the nine months ended December 31, 2025, revenue was ₹291 crores, up 9.6% year-on-year, with profit at ₹5.92 crores compared to ₹3.6 crores in the prior year.

Segmental Performance and Strategic Shift

The company observed a significant shift towards its in-house manufacturing segment, which saw revenue grow by 11.6% year-on-year and 15% quarter-on-quarter to ₹60.7 crores in Q3 FY26. This segment now contributes approximately 65.3% of the total Q3 revenue. Conversely, contract manufacturing revenue declined by 8.7% year-on-year and 37% quarter-on-quarter to ₹32.3 crores. Management anticipates continued improvement in in-house manufacturing, targeting a 65:35 mix (in-house to contract) for the next financial year.

Margin Analysis and Outlook

Gross margins showed a healthy improvement, reaching 37.1% in Q3 FY26, up from 34.2% in the same period last year and 34.8% in the previous quarter. Despite the Q3 EBITDA margin being 5.8%, management is confident of achieving an FY26 EBITDA margin between 6% and 6.5%. This confidence is underpinned by expected slightly better revenue in Q4 and continued gross margin improvement, alongside the easing of the pollution ban in Noida.

Operational Challenges and Market Conditions

Q3 FY26 was significantly impacted by environment-related restrictions and construction bans in North India, particularly Delhi and NCR, leading to a loss of 14-15 working days. These restrictions tightened credit cycles for channel partners and distributors, affecting cash flows and overall demand. The branded plywood segment remains highly competitive, and the building material space faces tight financial liquidity. Management has prioritized fiscal discipline over chasing revenue growth.

Raw Material and Demand Dynamics

Timber prices have stabilized and are expected to remain in the current range for the foreseeable future, with no major softening anticipated. However, the situation is fragile, with potential upward pressure from a weakening Indian Rupee and strengthening US Dollar. While secondary sales showed higher movement year-on-year, primary revenue growth was constrained by the company's credit discipline. Operations are expected to be 'back on track' from Q4 FY26 onwards, with a slight revival in the unorganized sector due to reduced cheap imports following Quality Control Order (QCO) norms.

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