Duroply Industries Ltd (NSE: DUROPLY) Q1 2026 Earnings Call dated Aug. 04, 2025
Corporate Participants:
Unidentified Speaker
Akhilesh Chitlangia — Managing Director & Chief Executive Officer
Vijay Kumar Yadav — Chief Financial Officer
Analysts:
Unidentified Participant
Udit Gajiwala — Analyst
Presentation:
Unidentified Speaker
Good morning, ladies and gentlemen. I am pleased to welcome you on behalf of Duroply Industries Limited and SKP Securities to Duroply Industries Q1FY26 result webinar we have with us Mr. Akhilesh Chitlangia, MD, CEO, and Mr. Vijay Kumar Yadav, CFO. This webinar is being recorded for compliance reasons during the discussion. Certain forward looking statements must be viewed in conjunction with the risk that the company faces. We will have Mr. Chitlangi as opening remarks and a Q A session. Thank you and over to you Mr. Sitlangia.
Akhilesh Chitlangia — Managing Director & Chief Executive Officer
Thank you so much. Good morning everyone and thank you for attending our earnings webinar for the first quarter FY26. On this call I’m joined by Mr. Vijay Yadav, our CFO. Duroply was founded in 1957 and has over the years built a brand in the industry quality which has been maintained. Europly recently celebrated the start of a 60th year in operation. We feel proud to have played a small but meaningful part in India’s growth story for over the last six decades. On the business front, Europly closed its first quarter revenue at 93.5 crores, a 10.3% growth over the same period last year and down 15% from the previous quarter.
The business reported a profit before tax of 1.88 crores, up by nearly 50% from the same period last year. This quarter revenue from in house manufactured goods stood at 49.5 crores flat over the same period last year and down by 17% on a quarter on quarter basis. Revenue from contract manufacturing stood at 44.1 crores, a 24.9% growth on a year on year basis and down by 5.5% on quarter on quarter basis. Gross margins this quarter stood at 34.1% similar to Q1 last year and down from 34.9% in Q4 FY25. Our EBITDA margin for the quarter stood at 5.39 crores, a 31% increase from the same quarter last year and a half percent degrowth over the previous quarter in margin terms.
EBITDA margin stood at 5.8% of sales as compared to 4.8% in the same period last year and 5.1% in Q4FY25 on the product mix Turo segment saw a 2% growth rate on year on year basis and an 18% regrowth on a quarter on quarter basis. Our mid segment brand Tower continued showcase robust growth with a 45% growth on a year on year basis and a 5.5% degrowth on a quarter on quarter basis. Overall, this quarter was challenging on the demand front especially on the premium product range. The war situation in North India had a big impact on our business as North India is our strongest market.
Improvement in profitability margins was driven by better operating leverage. I now request Vijay to take you through some of our other financial metrics.
Vijay Kumar Yadav — Chief Financial Officer
Thank you, sir. And good morning everyone. We will discuss some of the key finances that. The Gross margin is 34.1% as compared to Q4. 34.9% in Q4. 25. Employee cost is 11.9% of sales as compared to 11% in Q1. 25 and 9.5% in Q4. 25. Marketing expenses is 2.2% of sales as compared to 3.3% of sales in Q1. 25 and 4.2% in Q4. 25. Finance cost is 2.3% of sales data turnover ratio is 44 days as compared to 47 days of last year. Inventory turnover days is 149 days as compared to 165 days of Q1 ‘ 26. Register days is 170 days as compared to 90 days of Q4. 25. As a result, cash current margin cycle is 1013 days for Q125. Thank you sir.
Questions and Answers:
Unidentified Speaker
Anyone who wishes to ask a question may please raise your hand and we will enable your mic to take your question. I repeat, anyone who wishes to ask a question may please raise your hand and we will enable your mic to take your question. First question is from the line of Udit Gajiwala.
Udit Gajiwala
Good morning sir. Thank you for taking up my question. Can you please explain regarding the timber cost, what was your pricing in the north for the quarter and how do you see the year panning out for the same?
Akhilesh Chitlangia
Timber cost largely remained flat. For our in house manufactured we are dependent on imports, not so much on domestic timber and on imports we did not see any price escalation. However in Q2 in the domestic procurement market there are rumors of a cost increase happening. Timber cost has started going up which is very consistent with this time of the year with the rains. But nothing out of the ordinary. We don’t expect anything out of the ordinary. The type of challenges that was faced in the last two three years. We expect this year the timber cost to be reasonably moderated and no shocks coming the way it did in the last two three years.
Udit Gajiwala
And so what will be the differential in cost versus the domestic and your procurement from imports?
Akhilesh Chitlangia
So import on A per unit basis is at par with domestic. But what happens is the inward shipping cost of taking the material from the, let’s say the UP belt or from, you know, north Andhra to Rajkot, which is where our plant is located. That makes it very expensive. And that’s why we are better off today being on import landed cost with the inward freight. The imported is slightly cheaper for us. However, there are different quality parameters and we still need to use the domestic timber. But yeah, that’s the main reason why import is viable for most plants that are based out of the western part of the country, which is dependent on, you know, which is close to a port.
Udit Gajiwala
Thank you for answering. And secondly, you mentioned in your opening remarks about some slowdown that you are witnessing in the premium segment. So was it purely because of this temporary situation in north or do you think it would be prolonged for coming fiscal?
Akhilesh Chitlangia
So the yes one was the situation in North India that definitely had a part to play. And the premium segment largely goes to, you know, the HNI segment where a lot of bungalows are constructed, the tower segment. We are focusing largely on contract, you know, on contractors that are taking material on turnkey basis, furniture manufacturers and even some cases in projects there. We did not see any decline in the volume. It came only from the premium segment. There is a little sluggishness in demand. I think the premium segment will start growing again. The July numbers are in already.
So the premium segment is moving back into the right direction. It was largely, I think, driven by what happened in the north.
Udit Gajiwala
Understood. And sir, just lastly, if you can touch upon any sense in terms of the unorganized competition, given the timber cost, they still continue to be under pressure. But do you see that releasing up by the end of the fiscal.
Akhilesh Chitlangia
More than that, I think the challenge is going to come with the implementation of, you know, the QCU norms by bis. A lot of imported material that used to come into the country that has not happened over the last quarter that will actually help the branded segment, which will also help the unorganized segment. Because the unorganized segment was facing tremendous pressure on selling because of these imports. So the unorganized sector and the organized sector both are expected to do well going ahead because as the, you know, the loading of the inventory was done in the fourth quarter across every segment by traders, a large part of the inventory has now been flushed out.
So now I think the demand will start moving in the right direction for both organized and unorganized. However, with the growing per capita income, the organized sector should get a Faster growth rate now.
Udit Gajiwala
Thank you for answering sir. That was very helpful. Thank you.
Unidentified Speaker
Thank you. Anyone who wishes to ask a question may please raise your hand and we will enable your mic. The next question is from the line. Of Chai Sri Bajaji. Please unmute yourself and ask the question. Jaishree, please unmute yourself and ask your question. Anyone who wishes to ask question please may, you may raise your hand and we’ll enable your mic. I think there’s some issue with Jashri. I think if you can put it in the chat box that might help. Jasher, can you put your question in the chat box? Yeah she is there. Please ask a question in the chat box.
Akhilesh Chitlangia
What was the volume growth in Q1? Volume growth was about 9 odd percent. Has the company taken any initiative towards digitization and automation? How are these strategic investments? Translating operational efficiencies, new market advantages. So Jaishree, we recently have adopted a new Salesforce application and using that for better tracking of our sales team and getting them to be more effective on ground we are also automating a lot of our backend processes to reduce manual intervention. So those are the type of things that we are working on. I hope that answers your question on that. But largely we are really focusing on getting the productivity of our salesforce, our current sales force substantially increased through you know just better planning tools and monitoring tools. Yeah.
Unidentified Speaker
Do you have any follow up questions? Just want to know who is your competitor in the market.
Akhilesh Chitlangia
We compete with the organized sector and in that multitude of brands we also compete with the unorganized sector because you know our retailers are multi brand outlets. They keep, they stock the organized sector and they also stock material from other brands. So we are basically competing with everyone on the premium segment. We compete with brands like Green Ply, Century Ply and then there are other mid segment brands out there and you know every local market has their own. You know in eastern India there’s a brand by, by, you know Austin Plywood. In north there are other brands.
In south there are other brands. So every regional area has a different brand. So yeah, I hope that answers your question.
Unidentified Speaker
Next question is from the line of Shreyanship, how will Ebitda margins improve going forward? Since we intend to invest in marketing and Salesforce what is our Target margin for FY27.
Akhilesh Chitlangia
So Shreyans. Okay. If you see our Ebitda margins have been continuously improving quarter on quarter for the last four or five quarters and this is in spite of us investing on Salesforce and marketing. Salesforce is and marketing both are investments and we are getting so you know, we are getting better at optimizing them. I think this quarter our marketing spend was lower. Our marketing spend this year will be at about three and a half percent of sales on overall average. And over the years that will start coming down as the revenue starts going up further.
As for the salesforce, we need to invest for this year as well as for future years so that the employee cost will always be slightly on the higher side. Our target margins for FY27 it would be in the range of six and a half to seven percent. That’s what we are aiming for. Six and a half would be the bare minimum that we would be looking to do.
Unidentified Speaker
Harshit Singhania is asking, is there any guidance for future growth and capacity utilization? And also the cash conversion cycle is increasing. So is that a matter of concern?
Akhilesh Chitlangia
Right. So for future growth we’ve always maintained that our current aim is to be on an asset light model. So we are working on establishing more capacities with contract manufacturers as our demand goes up. For our main plant, Rajkot, currently we are at about a 70 utilization that can go up to about 85% without an issue. So there is some headroom over there and we are working on getting to those, you know, to that capacity by, you know, sometime this year. The cash conversion cycle is increasing and it is a matter of consent concern in a way.
Yes and no. So our data days in the last quarter, fourth quarter had substantially shot up. So we have reduced our days debtors significantly by three days and it will come continue to come down in this quarter as well as for our inventory days, it is slightly on the higher side but again the trend is in the correct direction. Largely where you see the reduction has happened is it happened on the days, creditor, creditor days which used to be two, three years ago, you know, 160, 170 days which has now come down to, you know, the range of 90 to 100 days.
And I think that’s good for the company because if we pay our suppliers on time we will get better quality material as well as better pricing power. So that is our current focus. The company has sufficient liquidity for this and you know we also have warrants that were due to convert coming, you know, that will be converted within the next month or so. So yes, that’s the reason why the cash conversion cycle is getting worse. Our aim is to pay better and get better procurement terms.
Unidentified Speaker
Thank you. Anyone who wishes to ask question, please raise your hand. Kindly unmute yourself. Shayansh Kindly unmute yourself and go ahead. Your mic is enabled. Shans regret the inconvenience if you’re unable to mute yourself. If you could just put a question on the chat box that might be easier. Could you use the chat box to ask your question? Shriansh is asking. GMs have not improved over the last three years and EBITDA margin guidance of six six and a half percent by FY27 doesn’t look that good. We did 6% in FY23.
Akhilesh Chitlangia
So okay, so gross margins, if you see a mix of in house manufactured, which used to stand at about 70% of our total revenue today is at about 60 odd percent. The in house manufactured goods tend to have a much higher gross margin at about 42%. The trading, the trading which used to be 30% has now gone north of 40%. This used to have a margin of about this currently has a margin of 23 odd percent. So blended. The gross margin has remained flat. However, this has gone up at each product level. So and that’s why you’re seeing this to be flat is because of the mix shifting as the company’s revenues are growing.
We did 6% in FY23, but the competitive landscape and the raw material cost that FY24 and FY25 that we have gone through so one by one. So the FY23 we did 6% but the landscape, the competitive landscape has substantially gone up. The raw material cost pressures of the last two years have significantly gone up. That has also had an impact. In addition, if we want to continue to grow at 15 to 18%, we grew at 15% last year. If we want to grow at 15 to 16% consistently over the next three, four years, employee cost will be one of the major factors which will be under pressure because we are also having to recruit better quality people and retain our star performers.
In terms of Rosie, our aim for Rosie is to hit double digits by end of this year. Anywhere between 9 to 12% is the ROCE aim that we are looking for. And if you plan to become asset light, that means also manufacturing will increase which are lower gross margin. Yes, the lower gross margin. However, the other manufacturing expenses which come of running a plant, such as labor, you know, and everything else associated with running a plant is not there at the right time when the volumes are large enough. We will then look at optimizing this further.
But yes, the operating, the gross margins are lower but so are the operating margins of, you know, buying out. We do get 22% on the outsourcing That’s a really good healthy margin that we have. The ROCE margin for this FY26 is anywhere in the range of 9 to 11% or 9 to 12%. Sorry.
Unidentified Speaker
Thank you.
Akhilesh Chitlangia
Thank you.
Unidentified Speaker
Anyone who wishes to ask a question, please raise your hand and.
Akhilesh Chitlangia
Sorry, I just read one of Shans comments and I’ll just go back our this thing is six and a half percent. EBITDA is the minimum that we are aiming for this year. So our range is six and a half to seven percent, not six to six and a half. I just saw that so I thought I’d just reiterate that. Yeah. Thank you.
Unidentified Speaker
If there is no other questions then I think that was the last question in the queue. As there are no further questions, I would now like to hand the conference over to Mr. Chitlangia for the closing remark.
Akhilesh Chitlangia
Right. Thank you. So the first quarter was challenging for us. The demand was muted. However, we posted a double digit growth rate. We are focused on reducing our current assets of working the data days as well as inventory days. We expect our growth rate to again increase as the year goes on. We are relentlessly investing in our team infrastructure and supply chain and these investments are starting to bear fruits. And the same will continue with further improvements in our operating margin. I now look forward to welcoming all of you again at the next earnings call. Thank you.
Unidentified Speaker
Thank you very much. On behalf of SKB Securities, I would like to thank Mr. Chitlangia for their time and we look forward to hosting you again. Thank you for joining us ladies and gentlemen and have a wonderful day ahead.