Release Date: May 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Duroply Industries Ltd (BOM:516003, Financial) achieved a significant milestone by crossing the 100 crore quarterly revenue benchmark for the first time, marking a 25.9% growth over the same period last year.
- The company's gross margins improved to 34.9% this quarter, up from 33.1% in the same quarter last year, due to better raw material costs and a favorable product mix.
- Revenue from contract manufacturing saw a substantial increase, with a 36% year-on-year growth and a 32% quarter-on-quarter growth.
- The EBITDA margin for the quarter increased significantly, standing at 5.4% of sales compared to 1.4% in the same quarter last year.
- Duroply Industries Ltd (BOM:516003) has made strategic investments in expanding its sales team and marketing efforts, which have started to yield positive results in terms of revenue growth.
Negative Points
- The company's debtor days increased to 47 days from 39 days in the previous year, indicating a slower collection period.
- Inventory days rose to 165 days compared to 149 days in the previous year, which could tie up capital and affect cash flow.
- Despite improvements, the company's EBITDA margin is still lower than some peers, which have margins in the 9-10% range.
- The company faces challenges from raw material cost pressures, although some easing is expected later in the year.
- Duroply Industries Ltd (BOM:516003) operates in a highly competitive market with a significant unorganized sector, which still holds approximately 75% market share.
Q & A Highlights
Q: What percentage of sales is allocated to advertising expenses, and which regions are seeing aggressive advertising efforts?
A: The advertising expense for this year stood at 3.8% of sales, which includes brand promotion activities and influencer programs. Over 60% of revenue comes from North India, where aggressive investments continue. Additionally, selected pockets in South and West India are targeted for aggressive marketing and sales force development. (Answered by CEO)
Q: How long will it take for new markets to mature, and are there any new product lines introduced?
A: It will take 2 to 3 years for new markets to mature and become significant players. The company introduced 10 ft plywood and fluted panel veneer sheets but is not planning major product line expansions currently. The focus remains on growing revenue from existing product lines. (Answered by CEO)
Q: What is the revenue mix between B2B and retail, and how does it affect margins and working capital?
A: 95% of revenue comes from B2B, primarily through dealers to home buyers and contractors. Margins are similar across segments, with a focus on the home buyer retail segment. The debtor days increased due to extraordinary sales growth, typically around 40 to 42 days. Inventory days are higher due to strategic investments in finished goods inventory. (Answered by CEO)
Q: What is the outlook on raw material costs, and how have gross margins improved?
A: Raw material costs are expected to soften in the latter half of the year due to increased focus on sustainable plantations. Gross margins improved due to a better product mix, slight easing of timber prices, and efficiencies in plant and procurement processes. (Answered by CEO)
Q: How does the company plan to address the competitive intensity in the plywood industry?
A: The main barrier to entry is securing shelf space with channel partners. The company focuses on maintaining strong relationships with quality channel partners, which is crucial for scaling beyond a certain size. The industry has seen large players struggle to enter or exit due to this challenge. (Answered by CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
