Duroply Industries Ltd — Q3 FY26

Duroply Industries Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=sHN3ff27um4 Published: 3 months ago

0:01 1 second Good morning ladies and gentlemen. I'm pleased to welcome you on behalf of Durup Industries Limitable and SKP Securities to Durup Limited 0:10 10 seconds Industries Limited Q3 FI26 result webinar. 0:14 14 seconds We have with us Mr. Atela NBN CEO and Mr. Vijay Kumar Yadav CFO. 0:21 21 seconds Friends, this webinar is being recorded for compliance reasons and during the discussion, there may be certain forwardl lookinging statements which must be viewed in conjunction with the risk that a company faces. 0:31 31 seconds We'll have Mr. Chitlanga's opening remarks followed by a Q&A session. Thank you and over to you Mr. Chitlanga. 0:42 42 seconds Good morning Naven and good morning to all participants today. Thank you for hosting this uh once again Naveen. Uh good morning and thank you for attending 0:50 50 seconds our webinar for third quarter FI26. On this call we also have Mr. Vijay Kumar Yadava CFO. Uh Duply was founded in 1957 0:59 59 seconds and over the years has built a strong brand in the industry and it's recognized across the country for its high quality of high standard of quality which we have maintained over the years. 1:09 1 minute, 9 seconds Europe recently celebrated its 69th year in operation and we are proud to have played a meaningful part in India's 1:20 1 minute, 20 seconds growth story for over the last six decades quarter revenue at 93.05 crores a 3.6% 6% growth over the same period 1:27 1 minute, 27 seconds last year, down 11% from the previous quarter. The business reported a profit before tax of 1.37 crores, up by 13.7% 1:35 1 minute, 35 seconds from the same period last year. For the quarter, revenue from in-house manufactured goods stood at 60.7 crores, 1:42 1 minute, 42 seconds a 11.6% growth over the same period last year and up by 15% on a quarteronquarter basis. Uh revenue from a contract 1:50 1 minute, 50 seconds manufacturing site stood at 32.3 crores down 8.7% on year-over-year basis and down by 37% on a quarter-on quarter basis. Gross margin this quarter stood 1:59 1 minute, 59 seconds at 37.1% up from 34.2% same period last year and up from 34.8% in Q2 FI26. Oura 2:08 2 minutes, 8 seconds for the quarter stood at 5.4 crores a 23.7% increase from the same quarter last year. Uh though down 16.4% 4% from 2:16 2 minutes, 16 seconds previous quarter. In margin terms, the IITA margin stood at 5.8% of sales as compared to 4.9% in the same period last year and 6.2% in Q2 FI26. 2:27 2 minutes, 27 seconds Uh if you look at the 9 month performance, our revenue stood at 291 crores up by 9.6% in the same period and 2:33 2 minutes, 33 seconds the business reported a profit of 5.92 crores as compared to 3.6 crores. 2:39 2 minutes, 39 seconds Revenue u from inhouse manufactured goods stood at 163 crores up by 1.8% and 2:46 2 minutes, 46 seconds revenue from contract manufacturing stood at 128 crores uh marking a 21% growth over the same period. Gross margin saw significant improvement 2:54 2 minutes, 54 seconds standing at 35.3% as compared to 34.7% in the same period. 3:00 3 minutes Uh overall this has been a very challenging quarter for us uh which has been hampered extensively by the environment related restrictions in 3:07 3 minutes, 7 seconds constructions in a core market of north India and in particular Delhi and the NCR areas uh that has been very 3:15 3 minutes, 15 seconds challenging for us and now I'll request Vij Yadav to uh take us through some of the financials 3:22 3 minutes, 22 seconds you sir and good morning to everyone let me take you some of the key financial for the last year for 9 month FYI 26 3:31 3 minutes, 31 seconds employee expenses is 12.2% of sales as compared to 11.1% for 9 month FY25 3:39 3 minutes, 39 seconds marketing expenses is at 2.8% of sales as compared to 3.6% of sales for the 3:46 3 minutes, 46 seconds same period finance expenses is 2.4% 4% of sales as compared to 2% of sales for the last year. Same period. 3:56 3 minutes, 56 seconds Data for 9 month is at 45 days of sales as compared to 43 days for the last 4:02 4 minutes, 2 seconds year. Inventory is at 182 days of consumption as compared to 165 days of FY25. 4:12 4 minutes, 12 seconds Creditor days is 101 days as compared to 84 days of FY25. 4:19 4 minutes, 19 seconds As a result, cash conversion cycle is at 125 days for the 9 month FY26. 4:25 4 minutes, 25 seconds Our ROC on annualized basis is at 11.85% as compared to 10.64% 4:34 4 minutes, 34 seconds of the previous week. So these were the brief of the financials. Thank you sir. 4:42 4 minutes, 42 seconds Thank you Vijay and we would be more than happy to take any questions uh that you may have. 4:49 4 minutes, 49 seconds Langa. Thank you, Mr. Yad. Friends, we now open the floor for the Q&A session. 4:55 4 minutes, 55 seconds Anyone wishing to ask a question, request you to raise your hand and we'll take it up. 5:03 5 minutes, 3 seconds We take the first question from Nishita Sania. Nishita, please go ahead. 5:11 5 minutes, 11 seconds Um, yes. Hello. Good morning. Good morning. 5:14 5 minutes, 14 seconds So, uh, I had uh two questions. So one is that uh that uh in the previous call uh you mentioned that our own 5:21 5 minutes, 21 seconds manufacturing will uh get better in H2FI26 as the premium product segment grows. So what 5:29 5 minutes, 29 seconds is an update on that? Do we see any traction on the premium product segment? 5:36 5 minutes, 36 seconds U so yes Nishita there is a traction on the premium product segment. uh for this quarter alone there was a big shift from 5:43 5 minutes, 43 seconds our contract manufacturing to our uh uh to our in-house manufactured them. We had higher revenues from our in-house manufactured goods which is a 5:51 5 minutes, 51 seconds significant shift um on a quarteronquarter basis alone the in-house manufacturing goods was up 5:58 5 minutes, 58 seconds nearly 15%. And that is a reflection that there has been a movement in the right direction for the company which is 6:05 6 minutes, 5 seconds also reflected in the uh increase in our gross margin. 6:10 6 minutes, 10 seconds Understood. So uh like can you give a bifurcation on how much revenue will be like got from in-house manufacturing and from contract manufacturing if possible? 6:20 6 minutes, 20 seconds Uh for yeah for this quarter as I stated earlier inhouse manufactured goods stood at 60.7 crores and contract manufacturing stood at 32.3 crores. 6:32 6 minutes, 32 seconds 33.2 in two groups 32.3 32.3 right okay understood and my next 6:40 6 minutes, 40 seconds question is you mentioned uh that we'll end the year FI26 at 6.5% EITA margin 6:47 6 minutes, 47 seconds earlier so in this quarter we've had 58% of EITA margin only so do we still see 6:56 6 minutes, 56 seconds that happening do we still like see us ending 6.5% uh we will be in somewhere in that direction between 6 to 6 and a half%. 7:09 7 minutes, 9 seconds Okay. So like how what will drive this a bit margin growth in Q4 of W6? 7:15 7 minutes, 15 seconds Um well we expect the revenue to be slightly better in the fourth quarter. 7:21 7 minutes, 21 seconds Quarter three we saw significant challenge especially in which is a core market 7:28 7 minutes, 28 seconds um related to the uh you know the pollution ban. So there is that second is also our gross 7:35 7 minutes, 35 seconds margins started improving and I think uh with a combination of both will allow us to hit that number for the year. 7:43 7 minutes, 43 seconds Okay. Okay. Understood. And like going forward the current uh like revenue uh 7:51 7 minutes, 51 seconds from in-house and contract how do we see that going forward? Are we going to increase our in-house manufacturing 7:58 7 minutes, 58 seconds more? what is the like percentage range that it will be in? 8:02 8 minutes, 2 seconds Um, so in-house manufacturing will continue to improve I in the fourth quarter as well and for the next 8:11 8 minutes, 11 seconds financial year. Uh, I think it's a little too early to say what would be the range but we expect a 5545 ratio mix 8:19 8 minutes, 19 seconds to continue which is what it currently is. Oh sorry 60/40 ratio to uh improve slightly uh to 6535 maybe next year but 8:27 8 minutes, 27 seconds it's too early for me to say so we expect that this sorry yeah so currently uh 60% comes from uh 8:37 8 minutes, 37 seconds contract manufacturing and 40% comes from inhouse no no I think just one second uh 64% 8:45 8 minutes, 45 seconds comes from in-house that's what it was for this quarter I think this 64 to 65% is what we're looking for the fourth quarter as well to be from in-house and 35% to be from outouse. 8:57 8 minutes, 57 seconds Okay. Okay. Thank you so much. Yeah. Thank you. 9:05 9 minutes, 5 seconds Friends, anyone with a question request you to raise your hand and we'll take it up. 9:18 9 minutes, 18 seconds Friends, anyone wishing to ask a question request you to please raise your hand. 9:24 9 minutes, 24 seconds Nishita, do you have a follow-up question? No, no, sorry. 9:32 9 minutes, 32 seconds We'll take the next question from Tarun Rati. 9:36 9 minutes, 36 seconds Okay. From Ashwant Rajan. Ashwat, please go ahead. 9:43 9 minutes, 43 seconds Yeah. Hello, sir. Thank you for the opportunity. Uh so uh my question was with respect to the import scare that 9:51 9 minutes, 51 seconds had reduced uh over the past few quarters over the last year in fact. So what is the current scenario on that and 9:58 9 minutes, 58 seconds uh if we do see uh imports flowing in again in the future how do we hedge ourselves for that risk? 10:07 10 minutes, 7 seconds Uh Ashra this is related to finished good quotes I'm assuming. Yes. 10:12 10 minutes, 12 seconds Okay. Um so the finished goods import that was coming um so now there is the 10:19 10 minutes, 19 seconds QCO norms uh which have been implemented since February or March of this year. So 10:26 10 minutes, 26 seconds there is not much of uh imported goods that are coming into the industry currently. uh however what has happened 10:34 10 minutes, 34 seconds is that the unorganized sector has had a slight revival in the last quarter or so 10:40 10 minutes, 40 seconds uh in the last 5 6 months on account of the cheap imports uh not coming so it's not had an impact on the premium segment 10:49 10 minutes, 49 seconds as yet but the unorganized sector especially towards Yamanaka or Kerala which was struggling because of the 10:56 10 minutes, 56 seconds cheap imports those industries have had a slight revival So um given on the unorganized end u how 11:05 11 minutes, 5 seconds do we see this for us? Uh are we seeing any stress on uh our volumes in any way or how does 11:12 11 minutes, 12 seconds um there is there was an expectation that there would be a significant improvement in the branded plywood segment but the branded plywood segment 11:21 11 minutes, 21 seconds has become a very competitive space right now. Uh so there are some challenges on volume especially uh in 11:29 11 minutes, 29 seconds terms of uh financial liquidity in the building material space overall has been a little tight from the channel partner side. Uh but I think this is uh 11:38 11 minutes, 38 seconds temporary and I think the country is just going through a phase and this will kind of sort out itself in the quarters or maybe over the next one year hopefully. 11:47 11 minutes, 47 seconds Having said that for us as an organization we've been very very disciplined on our dattors and uh on that side so we will continue to maintain that discipline. 12:00 12 minutes Okay. Thank you. Thank you Ashra. 12:07 12 minutes, 7 seconds Friends anyone wishing to ask a question request you to raise your hand. 12:13 12 minutes, 13 seconds Anyone 12:29 12 minutes, 29 seconds with a question, please raise your hand. We take the next question from Ha Mura. 12:38 12 minutes, 38 seconds Ha, please go ahead. Yeah. Hi. Uh am I audible? 12:47 12 minutes, 47 seconds Yes. Loud and clear. Yes. 12:48 12 minutes, 48 seconds Yeah. Yeah. Good morning. Uh uh you know thank you for the opportunity. Uh I just wanted to ask you on the timber front 12:55 12 minutes, 55 seconds side. Uh we had seen uh inflation over the last uh 8 quarters or so. What we understand is at least for plywood those 13:04 13 minutes, 4 seconds timber prices are sustaining where they are not going up. when can we see this coming off any anything I think in Feb 13:13 13 minutes, 13 seconds can we expect you know maybe next quarter just wanted to understand from so timber prices have stabilized you're 13:20 13 minutes, 20 seconds right but I do not expect them to soften too much I think they will be in this range uh for some time we have to also 13:29 13 minutes, 29 seconds note that a lot of uh wood veneer that comes into country today is is coming 13:37 13 minutes, 37 seconds from there also the factor of the Indian rupee uh you know becoming weaker and 13:47 13 minutes, 47 seconds there might as a result the domestic wood timber prices demand could go up if the dollar continues to strengthen and 13:56 13 minutes, 56 seconds 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 14:04 14 minutes, 4 seconds foreseeable few months uh I don't see U major hike or softening in the uh raw material prices for the plywood industry. 14:13 14 minutes, 13 seconds Okay. Okay. Understood. So where would we be in terms of you know per kg would we have 9 rupees today in the north? 14:21 14 minutes, 21 seconds U ma'am we don't produce timber we don't procure timber in the northern part of the country. So I would not be the right person to give an answer on that. 14:29 14 minutes, 29 seconds Okay. But any average price that you would know I mean what we would be working with? No I I don't want to speculate on that. 14:36 14 minutes, 36 seconds Okay. Okay. Understood. And uh you know the second question is more on the demand front, right? I mean you did uh 14:44 14 minutes, 44 seconds you know say that the competitive pressures are higher on the branded side. So would that also mean that the 14:51 14 minutes, 51 seconds secondary demand you know the consumption is still lagging and that's the reason for this entire vicious circle. 15:01 15 minutes, 1 second There are two parts to this. So our uh tracking of tertiary or secondary sales shows that there is a higher movement of 15:10 15 minutes, 10 seconds secondary sales over last year significantly higher but that's not relating into our primary revenue growth for the time being. Uh one of the 15:18 15 minutes, 18 seconds reasons for that is the credit tightness that we maintain with our channel partners. Uh and we've taken a conscious call that we will not chase revenue 15:26 15 minutes, 26 seconds growth over you know uh fiscal discipline. Um so that has a factor. 15:34 15 minutes, 34 seconds Secondly, as I said in the third quarter, uh we had the graph 4 restriction in Delhi NCR which was very 15:41 15 minutes, 41 seconds extended in the month of December and then post Diwali as well and compared to last year uh this year we've had I think 15:49 15 minutes, 49 seconds more than 14 to 15 working days loss in Delhi and CR in surrounding areas. uh and as a result of that the you know the 15:58 15 minutes, 58 seconds credit cycle becomes tighter the you know cash flows for the channel partners and distributors become tighter because there's no construction happening 16:04 16 minutes, 4 seconds there's no flow of funds into them and that's had a an impact on us um and as 16:12 16 minutes, 12 seconds an organization more than 60 55 to 60% of our revenue comes from northern part of the country and so we are very sensitive to this um but I think fourth 16:21 16 minutes, 21 seconds quarter onwards uh and then quarter one next year I think we should be back on Understood. Okay. This has been very 16:28 16 minutes, 28 seconds helpful. Those were my questions. Thank you. Right. 16:39 16 minutes, 39 seconds Friends, anyone with a question requested to please raise your hand and we'll take it up. 16:53 16 minutes, 53 seconds Anyone wishing to ask a question, please raise your hand. 17:12 17 minutes, 12 seconds Anyone wishing to ask a question, please raise your hand. 17:18 17 minutes, 18 seconds Friends, as there are no further questions, I'd like to hand over the webinar back to Mr. Langa for his closing remarks. Thank you and over to you. 17:27 17 minutes, 27 seconds Right. Um thank you ladies and gentlemen for joining our Q3 FI26 earnings call. 17:34 17 minutes, 34 seconds Um I really look forward to seeing you at the next earning call as well. As I mentioned that this quarter was uh 17:41 17 minutes, 41 seconds challenging but the organization's uh gross margins have improved and our margins are yearon year improving and we 17:49 17 minutes, 49 seconds expect this performance to keep continuing and look forward to seeing you at the next webinar. 17:59 17 minutes, 59 seconds Uh Naven you're on mute. Thank yeah thank you very much Mr. 18:02 18 minutes, 2 seconds Sidangi and Mr. Ya for taking time out to interact with the investors. We look forward to hosting you in the next quarter once again. Thank you very much, ladies and gentlemen. Have a lovely day. 18:13 18 minutes, 13 seconds Thank you.