Dollar Industries Limited — Q4 FY26 earnings call

So this price hike, the entire industry has taken almost after 2 years of time. So after 2 years, we have taken this price hike in the Q1 of this current fiscal year. And we don't think that it will continue further because we are seeing the cotton prices and the yarn prices are getting stabilized now. So the price hike that we have taken in the Q1, I think we don't have to take any further price hike now.

Management clarified the timing and quantum of the price hike (4-6% in Q1 FY27) and expressed confidence it would not lead to market share loss as it's an industry-wide move.

Asked by Bhargav Buddhadev

Yes, we can certainly reduce the debt by FY28, we reduce to 0. Already in the last year, we reduced the short-term borrowings and long-term borrowing around INR50 crores.

Management provided a clear target for debt reduction, aiming for zero debt by FY28, and highlighted recent progress.

Asked by Bhargav Buddhadev

Basically, the merger of RPT with our main Dollar companies, mainly lead to corporate governance and we reduce our related party transactions. The revenue effect on the total revenue is not much like in earlier calls, we also expect that around INR4 crores to INR5 crores of expenses reduced royalty and other service charges and rent payment.

Management clarified the primary benefits of the merger are corporate governance and expense reduction, with minimal revenue impact.

Asked by Deepali Kumari

So, our Pepe inner fashion, the JV company that we have, we have a license for Pepe jeans and it deals only with athleisure innerwear segment under the brand name Pepe Jeans. So over there, what we are doing is we are only operating in D2C segment or the channel, which is e-commerce sales through large format stores, organized retail instead of trade channel that we usually do in Dollar industries. ... So it does not include Pepe Jeans sales because only the bottom line gets consolidated as 51% share is with our JV partner, out of which 2% is the non-voting shares that they have. And so only bottom line gets consolidated. In our top line, the revenue coming in from the JV company does not get added up.

This clarifies the JV's distinct D2C focus and how its financials are consolidated, explaining why its revenue doesn't appear in the top line.

Asked by Deepali Kumari

With respect to gross margin, we can say that the main factor is our product mix in this quarter, our product mix, our economic segment Dollar Always continued around 47%. And overall, in full year, it is around 41%. So mainly ASP due to economic segment increase, our ASP is reduced to this extent. And some of part also not more, some of part also due to increase in the yarn prices because the due to increase in the yarn prices, our prices are same and the realization is reduced to the extent. So mainly 2 factors: one, contribution of economic segment increase to 47% and increase in the yarn prices.

Management explicitly attributed the 170 bps YoY gross margin decline in Q4 to a shift in product mix towards the economic segment and higher yarn prices.

Asked by Shrinjana Mittal

See, inventory cycle is very season based. And like if you look at the half yearly balance sheet also, the inventory is a bit on the higher side because of the Thermal ranges. And so the major thing that we need to work upon is the receivable days we need to reduce that as well. So overall, we are very hopeful that this particular fiscal also, we'll be able to reduce our overall working capital cycle days by 5 to 7 days. And it will come majorly from the receivable days that we have.

Management acknowledged inventory seasonality but emphasized focus on reducing receivable days to further improve the working capital cycle.

Asked by Shrinjana Mittal

But what we are seeing in this particular quarter is because of the exceptional heat conditions across the Indian markets, so the retail footfall for this quarter has reduced a bit, but it's a timing issue. It's not a structural one. So the underlying demand has not changed. It has -- it remains intact. So that is what we are seeing right now.

Management provided color on the current demand environment, attributing Q4's reduced retail footfall to temporary heat conditions rather than a structural demand issue.

Asked by Resham Mehta

So what happens is the D2C brands who have closed down their offline channel and moved back to the online sales, their impact in the offline sales was very miniscule. So it wouldn't make a very big impact on the sales growth or the market share -- getting the market share from them. So it wouldn't actually make much of a difference over there.

Management downplayed the impact of D2C players shifting focus, stating their offline presence was minimal and thus their exit would not significantly affect Dollar's market share.

Asked by Shreya Baheti