Kaka Industries — Q4 FY25 earnings call

Call held 16 May 2025

Management summary

Kaka Industries reported a 16% YoY revenue growth and 71 bps EBITDA margin improvement for FY25, despite a marginal 1% decline in net profit due to higher interest and depreciation costs from recent capacity expansion. The company achieved its highest monthly sales in January '25 following the commissioning of a delayed power line to its new Lasundra facility. Management is targeting 40% volume growth in FY26, supported by expanded capacity, distribution network, and a new ₹25 crore captive solar plant expected to yield significant cost savings.

Highlights

  • FY25 revenue grew by 16% year-on-year.

  • FY25 EBITDA margin improved by 71 basis points.

  • Achieved highest ever monthly sales in January '25, validating demand robustness.

  • Targeting 40% volume growth for FY26, supported by new capacity and market expansion.

  • Investment in a 7.5 MW captive solar plant (₹25 crores) is expected to save ₹40-50 lakhs monthly in power expenses (55% saving) from August '25.

Concerns

  • Net profit declined marginally by 1% in FY25.

  • 125% rise in interest expense due to ₹32 crores term loan for new facility and HT power line.

  • 106% increase in depreciation due to ₹26 crores capital addition in FY25 and ₹31 crores in FY24 (total ₹57 crores).

  • Operations ran below installed capacity until January '25 due to delay in dedicated high tension electricity line connection.

  • Working capital days increased slightly due to inventory management challenges and high SKU count.

Key financials

  1. Revenue Growth 16%
  2. EBITDA Margin Improvement 71 bps
  3. Net Profit Growth -1%
  4. Volume Growth 17%
  5. Advertisement Expenditure ₹4 Cr

What they filed

Q4 FY26: revenue up 66.3%, net profit up 66.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY23Q4 FY23Q2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue75 79 88 83 95 +27%102 +29%125 +42%138 +66%
EBITDA3 11 9 12 13 +333%13 +18%17 +89%19 +58%
Net profit1 6 6 6 7 +600%6 +0%9 +50%10 +67%
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

  • Revenue Concentration FY25
    55% PVC sheet and section26% WPC6% uPVC window profile

Capital allocation

  • Capex ₹25 Cr
    • 7.5-megawatt captive solar power plant at Lasundra, Gujarat ₹25 Cr
    • Capital addition for new facility and machinery (FY25) ₹26 Cr
    • Capital addition for new facility and machinery (FY24) ₹31 Cr
    A cornerstone of our sustainability and efficiency strategy is our upcoming 7.5-megawatt captive solar power plant at Lasundra, Gujarat. This ₹25 crore investment expected to go live by August '25 will allow us to reduce our monthly power expenses by approximately ₹40 lakhs to ₹50 lakhs, yielding saving of around 55% and reinforcing our commitment to clean energy. ...106% increase in the depreciation, reflecting a ₹26 crores capital addition in financial year '25 and 31 crore in financial year '24, totalling ₹57 crores over the two years.
  • Debt Debt disclosed
    • New borrowing Term loan for new facility and HT power line ₹32 Cr
    125% rise in the interest expense following a ₹32 crores term loan for our new facility and the HT power line. ...So as of now, there is no plan to reduce the debt. But in case, if the opportunity comes, we will go for the, I mean equity also.

Guidance & targets

Volume Growth

  • Volume Growth Volume Growth · current financial year (FY26) · High confidence 40%
    Looking ahead, we are targeting 40% volume growth in the current financial year.

    — Chintan Bodar

  • Volume Growth Volume Growth · next two financial years (FY27, FY28) · High confidence 30% year-on-year
    And, for the next two financial year, we can grow 30% year-on-year.

    — Chintan Bodar

Revenue Potential

  • Maximum Revenue from Current Capacity Revenue Potential · annual · High confidence ₹400 crores
    It is around 400 crores. But we have the space. And we can also improve the existing machinery also.

    — Chintan Bodar

PAT Margin

  • PAT Margin PAT Margin · this year (FY26) · Medium confidence 6.5% or 7%
    So, for this year also it will be around 6.5% or 7% maybe. Because, the interest and the depreciation will also come into play in this year also because it is on the higher side.

    — Chintan Bodar

Monthly Revenue Run Rate

  • Monthly Revenue Run Rate Monthly Revenue Run Rate · coming year (FY26) · High confidence ₹20 Cr per month
    Yes. That is our target for this year.

    — Chintan Bodar

EBITDA Margin

  • EBITDA Margin EBITDA Margin · future · Medium confidence improve
    So currently, year-on-year, if you see that we are increasing the EBITDA margin, so definitely we are looking forward to improve the EBITDA margin through production efficiency and the new plant will help us to improve the EBITDA margin.

    — Chintan Bodar

Order Fulfilment Time

  • Order Fulfilment Time Order Fulfilment Time · future · High confidence 2-3 days

    From 10-12 days today

    Our aim is to bring down the order fulfilment time from the current 10 to 12 days to just two to three days, dramatically enhancing our dealer experience and the customer responsiveness.

    — Chintan Bodar

What to watch in Q1 FY26

Solar Power Plant Commissioning & Savings

Next quarter (Q2 FY26)
Current Under construction, expected to go live by August '25.
Target Operational, generating ₹40-50 lakhs monthly savings.

Why it matters

Significant cost savings from the solar plant are expected to boost profitability and contribute to PAT margin improvement.

A cornerstone of our sustainability and efficiency strategy is our upcoming 7.5-megawatt captive solar power plant at Lasundra, Gujarat. This ₹25 crore investment expected to go live by August '25 will allow us to reduce our monthly power expenses by approximately ₹40 lakhs to ₹50 lakhs, yielding saving of around 55% and reinforcing our commitment to clean energy.

Risks & concerns

  • Delay in HT Electricity Line Connection

    high

    New manufacturing facility commissioning was partially delayed, impacting production and capacity utilization until January '25.

    Management acknowledged

  • Macroeconomic Uncertainties

    medium

    PVC and UPVC profile industry remained resilient despite some macroeconomic uncertainties.

    Management acknowledged

  • Increased Interest and Depreciation Costs

    medium

    125% rise in interest expense and 106% increase in depreciation led to a marginal 1% decline in net profit for FY25.

    Management acknowledged

  • Inventory Management Challenges / High SKUs

    medium

    Working capital days increased slightly due to lots of SKUs, company aims to reduce SKUs and inventory days from 10-15 to 2-3.

    Analyst acknowledged

Q&A highlights

8 direct
Capacity Utilization and Revenue Potential Direct
It is around 400 crores. But we have the space. And we can also improve the existing machinery also.

Clarifies the maximum revenue potential from the current infrastructure, indicating significant headroom for growth.

Asked by Mukesh Panjwani

Impact of Solar Power Plant on Profitability Direct
So, it will be around month-on-month basis ₹40 to ₹45 lakhs, ₹50 lakhs around because it is based on the generation and the consumption of the electricity.

Quantifies the expected monthly savings from the solar plant, which is a key part of the company's efficiency strategy.

Asked by Mukesh Panjwani

New Capacity Ramp-up and Current Utilization Direct
But now from April onwards, we are achieving that 60%, 65% of the installed capacity.

Provides an update on the utilization of the new capacity, indicating that the company is overcoming initial delays and ramping up production.

Asked by Tanvi

Revenue Growth Drivers and Confidence Direct
And because at every time, 30% to 40% of the total order, we were not serving on time. So, they were procuring from the another, I mean, manufacturer or somewhere else. So that is one. Second, we are expanding our sales force in the selected areas, and we are also collaborating with the influencer across the categories. so that is why we are confident that, we can achieve this in this current year 40% and 30% year-on-year.

Explains the basis for the ambitious growth targets, citing past unfulfilled demand, sales force expansion, and influencer collaborations.

Asked by Pritesh Vora

Product Mix Evolution Direct
So, we expect that UPVC window and profile will definitely increase in the current year, and WPC is 26%. So, it will also go up. I mean, the major contributor will be WPC and UPVC window in this year.

Indicates a shift in product mix towards higher-growth segments like WPC and uPVC windows, which are also higher margin.

Asked by Pritesh Vora

Polymer Price Volatility and Margin Protection Direct
Up to 5% we retain either side, and then we pass on.

Clarifies the company's strategy for managing raw material price fluctuations, showing a mechanism to protect margins.

Asked by Pritesh Vora

SPC Flooring Go-to-Market Strategy and Target Market Direct
So, we are targeting export for the SPC, U.S. and Europe. So, we are collaborating with the different exporters in India only as of now. So, in two to three months, we will have the clear idea on the strategy side.

Reveals the company's new product launch strategy for SPC flooring, focusing on export markets and outlining the timeline for a detailed strategy.

Asked by Keshav

Reasons for Lower Revenue Growth in FY25 Direct
So, till the December, we were struggling to get the dedicated electricity line. So last three months, we had the opportunity to gain or have the maximum production capacity. So, for the ninth month, we have not used our installed capacity at optimum.

Provides a clear explanation for the lower-than-expected revenue growth in FY25, attributing it to external infrastructure delays rather than demand issues.

Asked by Mahesh Atal

3 min read 7 chapters

Detailed narrative

FY25 Performance Overview and Profitability Headwinds

Kaka Industries reported a 16% year-on-year revenue growth and a 71 basis point improvement in EBITDA margin for FY25. However, net profit marginally declined by 1% primarily due to a 125% rise in interest expense from a ₹32 crore term loan for a new facility and HT power line, coupled with a 106% increase in depreciation reflecting ₹57 crores in capital additions over FY24 and FY25. These investments, while impacting short-term profitability, are foundational for future growth.

Capacity Expansion and Operational Ramp-up

The commissioning of the new manufacturing facility at Lasundra faced delays until January '25 due to awaited dedicated high tension electricity line connection, leading to operations running below installed capacity. Post-commissioning, the company witnessed a significant uptick, achieving its highest ever monthly sales in January '25. From April onwards, the company is operating at 60-65% of its overall installed capacity, with a maximum achievable capacity of 80% depending on product mix.

Strategic Growth Initiatives and Market Expansion

Kaka Industries is targeting a 40% volume growth in the current financial year (FY26) and 30% year-on-year growth for the subsequent two financial years. This growth is underpinned by expanding its domestic footprint, deepening presence in existing markets (Gujarat, Rajasthan, Maharashtra, Telangana, Karnataka), and unlocking new ones through investments in distribution networks and scaling up its sales force. The company also plans to launch SPC flooring, targeting export markets in the US and Europe.

Sustainability and Cost Efficiency Measures

A significant strategic initiative is the upcoming 7.5-megawatt captive solar power plant at Lasundra, Gujarat, with an investment of ₹25 crores. Expected to go live by August '25, this plant is projected to reduce monthly power expenses by ₹40-50 lakhs, representing a 55% saving. This move is anticipated to enhance PAT margins and reinforce the company's commitment to clean energy.

Product Mix and Margin Management

The current revenue concentration for FY25 shows PVC sheet and section at 55%, WPC at 26%, and uPVC window profile at 6%. Management expects uPVC window and WPC segments to be major contributors to growth in the current year, with capacity for WPC doubled (200% increment) and uPVC increased by 100%. The company maintains a strategy of passing on polymer price increases or decreases to customers, retaining up to 5% either side to protect margins.

Working Capital Optimization and Supply Chain Improvement

The company acknowledges challenges in inventory management due to a high number of SKUs, which has led to slightly increased working capital days. Efforts are underway to reduce SKUs and optimize inventory days from the current 10-15 days to a target of 2-3 days for order fulfillment. This initiative aims to drastically reduce inventory days to around 50 in the coming time, enhancing cash conversion cycle efficiency.

Brand Building and Competitive Edge

Kaka Industries is undertaking major steps to reposition its brand and build awareness across building material categories through digital campaigns, influencer outreach, and aggressive marketing initiatives. The company leverages its 20-year established presence, wide product portfolio, and new plant infrastructure to compete effectively against domestic, Chinese import, and regional manufacturers. Advertisement expenditure for FY25 was approximately ₹4 crore, or 2% of sales, with plans to increase this for aggressive market penetration.

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