Duroply Indust.

Duroply Industries reported a Q4 FY26 revenue of ₹111.6 crores, marking a 5% growth over the same period last year and a 20% increase from the previous quarter. The Profit Before Tax (PBT) for the quarter stood at ₹1.03 crores, which included an exceptional one-time^📎 loss of ₹27.5 lakh due to changes in the wages code. The Gross Margin for Q4 FY26 was 34.3%, a decrease from 37% in Q3 FY26, and EBITDA was ₹5.18 crores, down from ₹5.4 crores in both Q3 FY26 and Q4 FY25.

For the full fiscal year 2026, the company achieved an annual revenue of ₹402.6 crores, representing an 8.3% growth over the previous year. The Profit Before Tax (PBT) for FY26 was ₹6.95 crores, after accounting for exceptional items^📎. Earnings before exceptional items^📎 were higher at ₹7.23 crores, compared to ₹5.8 crores last year. The annual EBITDA reached ₹22.4 crores, a significant 25.3% increase from ₹17.9 crores in the prior year, with the gross margin on a 12-month basis at 35%.

The company demonstrated significant improvements in its working capital management during FY26. Days debtor reduced to 42 days from 47 days last year, indicating faster collection. Days inventory decreased to 146 days from 169 days, improving inventory efficiency. Additionally, days payable were substantially reduced to 72 days from 117 days last year, optimizing payment cycles.

Geopolitical tensions are having a high impact on the industry, particularly on chemical costs, which are petrochemical-based and largely imported from Gulf countries. This, coupled with the aggressive depreciation of the dollar, has led to elevated raw material and import costs. Rising freight and trucking costs, along with increasing labor costs, are contributing to a phase of very high inflation, making goods more expensive for consumers.

The plywood industry is largely unorganized (70%), with the organized sector growing at 10-11% annually, faster than the overall industry's 6-7%. While demand for quality plywood remains strong, the company has faced resistance in the market to further price increases, despite having partially passed on costs in March and April. Management noted that passing on any additional cost increases will be a challenge, although they believe their branded position allows for some pass-through.

To address the slowdown in growth experienced in the second half of FY26, Duroply is undertaking several initiatives. These include expanding its frontline sales force to reach more customers across India and reviewing loyalty policy programs with various stakeholders. The company is also shifting its focus to B2B customers and project sales, an area not previously prioritized, aiming to capitalize on a potential shift from unorganized to organized players due to supply chain disruption^🌐s.

The company aims to return to double-digit growth in the coming fiscal year. For the next two years, Duroply is targeting a volumetric growth of 10% to 12%, which is expected to translate into a quantitative growth of 9% to 12% after accounting for price effects. This guidance is conservative, considering potential impacts on demand from ongoing geopolitical tensions. Management also expects EBITDA margins to continuously improve from the current 5.5-5.6%.