Doms Industries Ltd (NSE: DOMS) Q3 2026 Earnings Call dated Feb. 02, 2026
Corporate Participants:
Aniruddha Joshi
Rahul Shah — Chief Financial Officer
Analysts:
Jinesh Joshi — Analyst
Sneha Talreja — Analyst
Aradna Jain — Analyst
Percy — Analyst
Kunal Voda — Analyst
Sunny. — Analyst
Ananya Nichani — Analyst
Mohsam Shah — Analyst
Aniruddha — Analyst
Anik Mitra — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Doms Industries Q3FY26 earnings conference call hosted by ICICI Securities Limited. Before we begin a brief disclaimer. The presentation which Doms Industries Limited has uploaded on the stock exchange and their website and the discussion during the call contains or may contain certain forward looking statements concerning dom’s Industries Limited business prospect and profitability which are subject to several risks and uncertainties and the actual results could materially differ from those in such forward looking statements. As a reminder, all participants line will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities. Thank you. And over to you.
Aniruddha Joshi
Thanks Iqra. On behalf of ICICI securities we welcome you all to Q3 and 9 months FY26 results conference call of Dom’s Industries Limited. We have with us today senior management represented by Mr. Rahul Shah, Chief Financial Officer. Now I hand over the call to Rahul Bhai for his initial comments on the quarterly as well as nine months performance and then we will open the floor for question and answers. Question and answer session. Thanks. And over to you Rahul Bhai.
Rahul Shah — Chief Financial Officer
Thank you. Good evening and a very warm welcome to everyone to the conference call for Q3 and nine month FY26. Joining me on this call is the team from Marathon Capital, our investor relations advisor. I hope everyone had an opportunity to go through the investor presentation and the results release that have been uploaded on the exchanges and our company’s website. To begin with let me take you through the highlights for Q3 and nine month performance. Our Q3 results showcase the strength of our balanced growth strategy, systematic execution and innovation driven new product launches demonstrating our focus on strengthening our market presence.
On a year on year basis we delivered a consolidated sales growth of 18.2% driven by strong performances in our core categories. Our nine month consolidated growth of 22.7% positions us to close the fiscal year at the upper end of our guided range of 18 to 20%. This performance reflects the resilience of our teams with disciplined approach towards implementation of our strategic priorities. Operationally we continue to leverage our comprehensive product range which remains a key driver for our performance. Quarterly growth was led by growth in categories across office supplies as we continue to see positive results on the back of enhanced capacities and positive market reception of products, kits and combos and hobby and craft categories saw robust demand growth driven by new attractive and utility focused product launches, material backed by addition in existing infrastructure, with modernization of some of our processes bolstering operational efficiency.
Our baby hygiene business also saw a significant uptick fueled by winter demand for diapers and enhanced capacity as compared to last year. Geographically, our revenue growth continues to be anchored by strong domestic demand which has grown to represent more than 85% of overall sales. On the export front, despite headwinds in the US Market due to higher tariffs, we are pleased to report a double digit growth of more than 15% over the nine month period. This was driven by strong demand for DOM branded products across key categories like Nepal, Sri Lanka, Middle east and few African countries where we are present.
Additionally, our distribution agreement with SILA has yielded positive results with initiation of exports of DOM branded stationery products to countries like Chile, Mexico, Canada, Europe, Turkey, South Africa and Australia. These initiatives and results clearly showcase our ability to navigate challenges and capitalize on opportunities in diverse markets. We are committed to expanding our product suite to meet the evolving needs of our growing consumer base. The quarter saw new product launches like acrylic markers and SKU additions in sketch pens, mechanical pencils pens, attractive kits across various categories. Further, I am pleased to share that we have recently commenced manufacturing and supply of vibrant metal pencil boxes designed specifically for kids, complemented by a newly designed range of school bags and paper stationery.
We are well positioned to capitalize on the upcoming back to school season. We have recently approved the formation of a 50:50 JV with 7 SDA, a FILA group company. The primary objective of the JV would be to manufacture and supply backpacks and bags and pencil cases targeting the premium segment. The partnership combines Sila’s Global Reach 7 product designing and know how and Dom’s manufacturing and execution capabilities. The formation of this JV is expected to be completed by end of Q1 FY27 and we believe that the JV will likely add new growth initiatives for the company in the future.
On the marketing front, we are strengthening our connection with audiences through innovative online and offline initiatives. Our social media community has grown significantly with over 3.8 million YouTube subscribers and 170,000 plus Instagram followers, making Dom’s a top admired brand in stationery and art materials. Our success wouldn’t have been possible without the continuous efforts of our people who have been one of our strongest pillars for the growth. As a recognition of their ongoing contribution, we recently granted additional 1 37,690 ESOPs to the members of the Dom’s family. Coming to our expansion initiatives during the quarter, we were able to enhance capacities across our core categories like scholastic stationery and office supplies within our existing infrastructure catering to the continued demand.
Additionally, our 44 acre project remains a key focus area with ongoing CAPEX investments which will enable us to meet growing product demand. We are progressing steadily on the project, albeit with a slight construction delay on account of prolonged and seasonal monsoon during the last discussion. We expect to start the commercial production from the first building during Q2 FY27. This capacity expansion along with other ongoing brownfield initiatives has been strategically planned and the delay should not materially impact our plan and other ongoing brownfield expansion initiatives should be able to support our growth strategy till that time.
Now coming to the details of our financial performance, consolidated operating revenues for Q3 FY26 stood at 592.2 crores, a growth of 18.2% compared to the same quarter last financial year. This increase in sales was predominantly on account of healthy performance in domestic market, recording a 19.4% growth in gross product sales year on year during the quarter. During the quarter under consideration, input cost for most goods had remained constant or were lower, especially for key raw materials like polymers, waxes, etc. Providing a positive impact to our margins. However, with prices now trending upwards, we expect a neutral impact on our full year results.
The Consolidated EBITDA for Q3FY26 grew by 17.7% surpassing the 100 crore mark and stood at 103.4 crores as compared to 87.9 crores in Q3FY25. The EBITDA margin for the quarter stood at 17.5% at the upper end of our rival range of 16.5 to 17.5%. The profit after tax for the quarter stood at 61.4 crores with a growth of 13.1% over the same period in the previous financial year and the PAT margin for the quarter stood at 10.4%. During the quarter PAT moderated slightly primarily on account of reduction in other income due to utilization of IPO proceeds towards capex which during the earlier period were part in fixed deposits.
However, the overall profitability remained within our guidance range as our core business continue to demonstrate volume growth backed by stable margins, underscoring the robustness of our portfolio and the effectiveness of our disciplined execution framework. On the CAPEX front, we continue to focus on our expansion initiatives. For the nine month period we have done a consolidated CAPEX of approximately 230 crores including capital advances. With this, we believe our capex spends for the fiscal would now cross 250 crores. Looking ahead, we continue to remain optimistic about our growth plan supported by our expected increase in demand in the domestic market, especially with the onset of the upcoming back to school season, thereby positioning us well for sustained growth and achieving our laid out fiscal target.
With this, I would now request to open the floor for questions and answers.
Rahul Shah — Chief Financial Officer
Thank you,
Questions and Answers:
operator
thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
operator
The first question is from the line of Jinesh Joshi from Prabhu Dasli Ladar Capital. Please go ahead.
Jinesh Joshi
Thanks for the opportunity. My first question is on 7. I mean what was the rationale for forming a separate JV with them to focus on say backpacks and bags when we already have an existing JV with pseudo which is into a similar line of business.
Rahul Shah
Hi Dinesh7 SBA with whom we’ve done this. JV was actually founded in 1973 by seven brothers in Italy and is one of Europe’s leading manufacturer of ergonomic backpacks, bags, trolleys and accessories. Seven generated revenues of close to 90 million euros in 2024 and holds a dominant position in Italy and across Europe in the back to school market and has a retail presence of over 6,000 plus retail points. It also has more than 60 international patents for this category of products. Recently SILA completed the acquisition of 51% stake in Seven the proposed JV that we are doing with Seven.
You know, it merges Seven’s premium design and RD expertise with Tom’s strength of managing manufacturing operations efficiently and it could lead to, you know, building a state of art Indian production for group’s global backpacks and bag requirements and at the same time it will allow doms to offer this premium range in the domestic market. You know for success of this entire jv, the active participation of the promoters of seven will result in effective transfer of know how and expertise to the JV Company at the same time will objectively remain focused on the business relating to dom’s branded bags, primarily catering to the Indian mass market demand for range of backpacks and school bags and also service the requirement of bags for doms kits and combo Packs this position Skido to scale efficiently in the mass market segment capitalizing on dom’s brand and distribution network.
So with clear objectives defined for both the companies where Skido focuses on manufacturing, distribution and sales of domestic mass market product and the new JV focused on manufacturing for sila’s global demand and high end premium range, we anticipate that there wouldn’t be any conflict between both these ventures or firms and both can be successful in the same segment.
Jinesh Joshi
Understood? Sir, if I heard you right, you mentioned that the sales of 7 was roughly about 90 million euros in 20. So is it safe to assume that that kind of potential can accrue within the jv? That is question one and secondly, when is the production expected to begin over here and what will be the typical price point of the backpacks? If you can just give some color on that.
Rahul Shah
So Jeevesh, we are targeting to complete the formation of the JV by end of Q1 FY27. Initially the plan is to start, you know, manufacturing operations to cater to the demand of Sevens products in international market. And definitely the opportunity is large but we still don’t have any number in mind in terms of the size of this operation. But over a period of time we believe, you know, a sizeable portion of this of the seven backpack requirement can be manufactured and exported from India. In terms of pricing of these products, if I look at the current portfolio of seven, the prices of these bags in Italy start from around 60 to €70 per bag.
Now what product gets finalized and launched in India? We are still a little time away from this but like I said, the first focus would be to start the manufacturing operations and you know, use this production facility to meet seven global requirements.
Jinesh Joshi
Sure sir, two small bookkeeping questions from my side. One is that if you can just share what will be our capex number for 27 and 28 given the fact that our 44 acre expansion is towards the fag end of completion, that is one. And secondly, just one small observation. Now if I look at our purchase of stock in trade on nine month basis that is at about 63 crores, roughly about 3.7% of our top line. And if I look at the base period, this figure was roughly about 2% of the top line. Now given the fact that we are largely macro integrated, can you please explain what has led to a surge in this number? I mean have we started resorting to some kind of outsourcing within any of the products? So if you can just clarify on that bit as well.
Rahul Shah
So Ginesh, to Answer your first question. So this year like we said on the call, we’ll end up investing close to 250crores in capital expenditure. We believe similar sort of investment will be done in the next financial year with an apex investment target between 225 to 250 crores. Currently I wouldn’t, you know the first few buildings of the 44 acres are getting ready. But like we mentioned earlier also multiple times this is like an ongoing project with multiple buildings being constructed in this project and every quarter starting from Q1 FY27 we’ll get new buildings, possession of new buildings and then about 90 days to commercialize operations.
So this will go on for the next year and a half. Sort of a thing. To answer your second question on stock and trade, are you referring to the consolidated financials or the standalone financials?
Jinesh Joshi
Consol figure.
Rahul Shah
So in Consol there are two major activities in which you would see a little bit of increase in stock and trade is with respect to paper stationery. Earlier you know Pioneer was our only subsidiary focused on paper stationary. But to meet the growing demand and to manage these operations better way we acquired STPL in East and have started also getting paper stationery products manufactured from a partner, you know, OEM partner in South India. So that is one reason why this stocking trade in paper stationery has increased. And also at Uni Cleanse which is a baby hygiene business, basically there companies predominantly into pants style diapers.
In this quarter we also introduced you know the flap diapers. A very small portion but they were basically manufactured from a third party OEM supplier and sold in the market under the unique lens Wowper brand. Uniquelens does not have the production infrastructure to make these flat side of a flat style diapers. And just in order to complete the product range right now we initiated some trading activity. Once this segment also grows we’ll evaluate, you know looking at more investment for these sort of diapers as well.
Jinesh Joshi
Got that? Thank you so much sir and all the best.
operator
Thank you. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Sneha Talreja from Nuama. Please go ahead.
Sneha Talreja
Hi, good evening team and congrats on the set of numbers. Couple of questions to mind. Paper stationery we have seen a deep route and I recall Rahul you telling me that you know we are gladly focusing a lot towards it. So what’s missing here and why the deep rope is what I wanted to understand.
Rahul Shah
If you see in paper stationery year on Year for the third quarter you will see a slight growth. One of the reasons for this is, you know earlier a lot of our paper stationery business was being rooted to pioneer stationery and there was some amount of trading activities for the papers that we used to buy like for example STPL which was last year not a subsidy. In this time when we used to get books manufactured for them, we used to buy the paper and sell it to STPL and buy the books from there. So there was some amount of reading activity which has now decreased.
But if you look at the nine month number, you know, YTD number, you see in the paper stationery segment we’ve grown at about 8.7, 8.9% and now with the back to school season coming in and now having more capacity with HCPL plus also our partner in South India, we believe this segment to perform much better.
Sneha Talreja
Thanks Ms. Ravanan. Secondly, on the new capacity which is likely to come up and you’ve been saying that you know, it will be coming up in phased manners if at all you can give some breakup. As for first year, which are the products where the focus will be on so as to you know, analyze the growth in individual segments and you know, followed by next year, you know, expansions will be in which other phase?
Rahul Shah
First we start with enhancing our capacity for wooden pencil. If you remember we were planning to, you know, initiate capacity expansion for wooden pencil in our existing infrastructure. But looking at the strong demand that we had in the ballpoint segment we then decided to expand our ballpoint manufacturing capacity in the existing infrastructure. So you know, wooden pencil capacity expansion is something which we first do in this 44 acre project followed by enhancement in production capacity for our writing instruments, then pencil and pencil accessories which is basically razor sharpener followed by scholastic art material. But again sir, again Sneha.
Basically you know one of the, you know, strategies that we always followed is to be a little flexible when it comes to introduction of capacities to meet the demands of the market and as much as possible be a little more, you know, flexible when it comes to initiating these capacity additions. So if there is any change in the market demand scenario then we will probably change. But otherwise the current plan is to first do pencil capacity addition followed by writing instruments and then scholastic art.
Sneha Talreja
Understood. Now also wanted to understand in our you know, hygiene segment now what would be the breakup between the diapers? I know we’ve recently launched the wet wipes but still any breakup here would be helpful.
Rahul Shah
So more than 90% of the sales is still diapers wipes is something which is still building up. You know we started with a single SKU in the wipe segment with a bag having 72 wipes. We recently introduced smaller pack with 30 wides so that sales in this segment is building up. But right now more than 90% of the sales comes from the diaper business.
Sneha Talreja
Understood. And eventually what would be the actual next year? Like can it become like more like 60, 40 or you know it has to be like any share which is an ideal share in this particular business.
Rahul Shah
Not targeted anything. Diaper remains the core focus area. Wipes is like a complementary product. The key focus would be diapers. And currently the way we have the capacity, I assume that this percentage of 90, 10 or 85, 16 would continue for some time.
Sneha Talreja
Understood. Thanks. Thanks Ravani and all the best.
Rahul Shah
Thank you.
operator
Thank you. The next question is from the line of Aradna Jain from BNK Securities. Please go ahead.
Aradna Jain
Hi. Thank you for the opportunity. Congratulations for the continued good set of numbers. A couple of questions. First I wanted to know a little more on the JV. So basically the 15 odd crores that we are initially investing, what is the plan? What’s the sort of revenue potential that we are expecting from this particular jv? And like you said that so you know we are positioning Skeeto as a mass brand while this will be a premium brand. So initially is the plan that we’ll just be exporting or will we also be targeting the domestic audience in India? Like what is the thought process? And in like the initial investment is 15 odd crores.
But going forward do we expect more investment in this particular JV and where exactly will the manufacturing be done? That’s my first question.
Rahul Shah
Hi Ararna. Aradna. Basically the approval that we taken right now and disclosed to the stock exchange is basically a total investment up to 15 crore rupees by both partners in proportion to their shareholding in the JV company. The JV company like I mentioned initially will first focus on the export opportunity which is available whereby the JV company will be a OEM manufacturer for backpacks and supply it to seven and other Sila Group companies across the world. In terms of, you know, product category, these bags are ultra premium backpacks. They are the audience in India for such backpacks is very, very limited.
But right now also considering Skido also operates the entire business through the DOMS distribution network. When we decide to launch these ultra premium backpacks in India market, it will be done through the same distribution network but targeting a very small, very niche set of end consumers. In terms of Projections, you know, we don’t have the. We’ve not yet prepared anything because this investment will happen in a step by step manner. But you know, with our experience of running SCIDO for almost a year and a half now, we believe that even in this business achieving a 3x to 4x sort of a gross fixed effect turnover is something which is achievable.
But it will happen, you know, across the next year or so once the buildup starts.
Aradna Jain
Understood. And the manufacturing will happen in Umbergao.
Aradna Jain
For this or
Rahul Shah
it will happen in Umberga.
Aradna Jain
Understood. My second question is on office supplies. Like office supplies have done really well this quarter as well. What is leading to this kind of traction? Have we like added new pens which is leading to this growth or the growth is primarily coming from the existing pen that’s gaining traction. And in the pen segment do we like have a hero product which is like standing out amidst all the other products? And have we like expanded beyond the rupee 10 price point at this point in time?
Rahul Shah
So basically for us all our products are zero products. You know, we invest so much in making a product so all the products are very close to our heart and the reception that we get from the market is also something similar. So basically the growth that you see in the office supply segment is definitely driven by writing instruments, the pen where you know we will be continuously increasing our capacity. So you know, and we earlier when we started our new molding unit for pen, you know you typically start with a few set of machines getting operational and over a period of time all machines operational.
So in this quarter you basically seen the entire pen segment capacity addition that built up that happened in the last previous two quarters coming in production. Therefore you see good results from this segment in terms of focus. We still continue to focus Primarily on the 5 rupee rent segment and with expanding our portfolio in the 10 rupee segment also. So weeks wise we are still similar what we were earlier.
Aradna Jain
So it’s like 70% coming from
Rahul Shah
not.
Rahul Shah
Moved beyond the 10 rupee segment.
Aradna Jain
Okay. And in terms of we also had plans of bringing in tips in house.
Aradna Jain
So.
Aradna Jain
So any progress there or are we still obtaining the tips from outside?
Rahul Shah
No, we still continue to operate tips from outside. As we said that we want to get into manufacturing of tips. This is more from a perspective of having some amount of internal control over the type of tips and to understand how it’s. It would be more like a R D plus in house consumption requirement that we have, we are in the process of getting there. So once the new Facility starts then you know, we’ll also get into tip.
Rahul Shah
Manufacturing
Aradna Jain
and in terms of guidance for FY20.
operator
Sorry to interrupt you. Aradna, sorry to interrupt you. I request you to rejoin the queue for a follow up question please.
Aradna Jain
Sure.
Aradna Jain
Okay, thank you.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to two per participant. The next question is from the line of Percy from IIFL Capital. Please go ahead.
Percy
Hi Rahul. Good evening. This bag seems to be a focus area for you. Just wanted to understand in SCIDO till now what has been our investment and what is the revenue turnover of this business? Whatever you want to say, either on a FY25 26 basis or quarterly number or ARR. Just for us to get a sense as to how the business is ramping up.
Rahul Shah
Hi Vasilhai. Good evening. So Vasilhai, backpacks or. I think the entire back to school segment is a segment which we were keen at exploring since a long time with Kido. We found partners who helped us in getting into this segment especially in the mass market segment. Very well. The bag was launched in the last back to school season towards the end of the last back to school season and now this is going to be.
Rahul Shah
Actually the first complete back to school.
Rahul Shah
Season where we’ll be launching this product. Till now We’ve invested about 1.02 crores in Skido and for the nine month ended 31st December we generated a sale of about 9.5 crores in this business. This is both the product that we sell, you know, in the market under the dom’s brand and also the bags which Kido manufactures and supplies to DOMS for its kits and combo packs.
Percy
You said sorry, nine months. FY26 is 9 crore.
Rahul Shah
Yeah.
Rahul Shah
The total investment in Pseudo will be roughly about 2 crores plus.
Percy
Understood? Understood.
Percy
Coming
Rahul Shah
about 1 crore, 1.02 crores proportionate to our shareholder.
Percy
Coming to this scholastic art business. I think it has grown about 12% in this country quarter. So just wanted to understand. See we understand your growth drivers which is the PENS segment and all these new initiatives, bags etc. But your core bread and butter which is the stationary business, the scholastic art and scholastic stationery business. I mean where are we now in this segment in terms of distribution? Where are we in terms of market share? What is the market growth here and what do you think? We can grow this business over the next three to four years which would include our own market share again so just I mean, not asking for a guidance, but just asking for a way to sort of evaluate and model this business out.
Do you still think that this is a business which can grow at sort of close to 15 to 20% or do you think that no, there will have to be these other new growth businesses like pens, bags, etc. Which will need to grow at maybe 50 to 100% in order for the company to do that? High teams, kind of a number.
Rahul Shah
Basically Scholastic stationery, Plastic art and Kitchen combo is something which we look together because you know, there are a lot of complementary products in these categories. So overall when we see all these three categories put together, we’ve grown by about 11.5%. One of a few reasons for this growth, especially if you see Scholastic stationery, is despite the impact of U.S. tariffs, you know, one of the key products that we used to export to the Fila Group company in US is wooden pencils, the blackyard wood pencil, where after the impact of 50% tariff, this sales has come down considerably.
Despite that, in this segment, year on year we’ve grown by about 2%. This has been because one, you know, we’ve launched mechanical pencils which were launched in Q2 FY26 and they’ve got a good reception from the market. These are categories plus you know, a little bit of capacity, spare capacity which we add from the, you know, decline in demand or sales to us for the wooden fences was used to increase the capacity for wooden colorless fences which get categorized in scholastic art. So that is one reason where you see the sales in the scholastic art segment increasing significantly year on year.
Plus, you know, we like we mentioned that we are slowly starting to increase our capacities for the wooden pencils in the 45 acre. The first plant that we are going to get ready will be focused on wooden pencils. Out of that, some capacity buildup has already started because we had some space in our color pencil division. So we’ve increased our capacity there. So overall color pencil as a segment, as a sub segment has done really well in terms of overall capacity increase. You know, at target to increase the capacity of our wooden pencil is from about 5.8 million that we have, sorry, 5.53 million that we have currently to.
Rahul Shah
About.
Rahul Shah
Going in the next couple of years. This will be a gradual increase. So in the coming year and actually more in the year after in FY28, you’ll see significant growth coming from the sales of Scholastic stationery and Scholastic art material where wooden pencil will become a key growth driver. We believe that There is still significant potential in the market both in domestic and on export front. You know there are already now talks of the US tariffs coming back to normal. So once this comes back to the normal range again, the lost sales to us will reinitiate.
Plus with more capacities in place we’ll be able to get a better output for both the domestic and export markets. So we are confident on the growth prospect on these two segments as well. In terms of market share, honestly we will not have, you know, we don’t track or follow any market reports but would be fair to assume that, you know, we’ll be, you know, especially in the pencil segment upwards of about 35% and with the new capacities coming in will be close to about 45% short of a market share.
Percy
This 11 and a half percent is with exports. Can you tell me what the number would be for only the India business?
Rahul Shah
For the growth of.
Percy
For the three segments you said? Yeah, yeah. The scholastic arts, scholastic stationary kits and combos which you said together is 11 and a half percent that includes exports. What would it be for the India business?
Rahul Shah
I would not have purchased this answer right now. Probably can come back to you all with this reply. We have our, you know, IR team. Get in touch. I don’t have the numbers offhand right now.
Percy
No problem. And this 11 and a half percent which you have done going ahead, let’s say over a three year cagr, what do you think should be a target for a three year period?
Rahul Shah
So firstly this will all depend upon when the capacity is and is going to come up and how it is going to be built up. But you know this should follow once there will be a time when there is a major capacity addition happening. You will see this number to increase significantly in that year and then moderate down.
Percy
But that’s why I don’t want your understanding.
Rahul Shah
Yeah. So this segment also should follow the company’s overall, you know, growth rate in the next three to five years.
Percy
Okay. Okay Rahul, thanks a lot. That’s all from me. All the best.
Rahul Shah
Thank you.
operator
Thank you. The next question is from the line of Kunal Voda from BNP Paribas. Please go ahead.
Kunal Voda
Yeah, thanks Ralph. So first is how should we look at the new capacities and their contribution? Would it like add 5, 7% every quarter? Will it be lumpy? And how does the capacity come in over the next six to eight quarters? That’s the first question. Second one, I’ll come to lilip later. But like if you can ask the first one.
Rahul Shah
Basically historically the way we’ve seen it is once we get the possession of the building to start the plant, it takes us almost about a 90 day sort of a period. And once we start the plant, it takes us about six odd months to reach, you know, decent level of capacity utilization. Because in the initial phases there are some built up happening, some, you know, connections and assemblies and synergies that get developed. You need to sometimes change the positioning of certain machines. And all it takes is about six to seven months to reach a decent level of production.
So this is how we see typical build up happening. So the idea is every three months having some new capacities. Starting first with pencils, then with office supplies, purely writing instruments, which includes pens, markers, highlighters. Then would be pencil accessories, which is eraser sharpness. Because that will complement the growth in capacity for a pencil. Because in a pack of S3, you need to give one sharpener and eraser and then eventually followed with some amount of additional capacity for scholastic art materials.
Kunal Voda
Thanks for that. But I wanted to understand whether it will be uniform. It will be uniform or it will be lumpy. I mean like say will there be one large factory or it will be like similar size factories, similar contribution from each of the factories.
Rahul Shah
So basically in the 45 acre project, most of the buildings are similar in size, which is about 150,000 square feet building. So this is, you know, you, since you’ve seen the plant, just to give you a reference, this is almost double the size of our current eraser plant which you would have seen.
Rahul Shah
So.
Rahul Shah
They are similar. So the growth will not be very lumpy yet. There would be some quarters where you will probably see a lump compared to the base quarter. Because probably in the base quarter you might not have had that amount of capacity addition. But sequentially it should be pretty much in line.
Kunal Voda
Understood. And how many factories will come in.
Kunal Voda
Total over the next whatever, two, three years, four years.
Rahul Shah
So that right now we have plans to construct about a total of nine buildings.
Kunal Voda
Nine buildings. Okay, understood.
Kunal Voda
Okay, okay, okay. Second one is regarding the
Rahul Shah
construction going on for sheds. These are going to be basically storage unit. Then there would be utility buildings. So these are all in addition. But right now we are planning to have nine odd buildings constructed for production purposes.
Kunal Voda
And these nine buildings will come over about nine quarters in the eight, nine quarters.
Kunal Voda
How does it come?
Rahul Shah
Yes,
Kunal Voda
understood.
Kunal Voda
Second and last one is regarding the ultra premium banks you will be manufacturing. Where are these bags currently getting manufactured and what is the cost saving you are able to achieve? And will the margins be comparable to what you make currently?
Rahul Shah
So this production with seven Spa does is right now they have production facility, a small facility in Italy and also sourced considerably from China. Definitely with the, you know, with the seven, the partners like Silas, partners at Stellan also being involved in this JV and working closely with toms, they will also have their skin in sequential. So they would also want to shift production as much production as possible to India over a period of time. So it can become a sizable business for TOMS as well.
Kunal Voda
But what’s the rationale? I mean will the cost be which.
Kunal Voda
You will be able to deliver much.
Kunal Voda
Lower compared to what the China cost will be or the quality or like what’s the rationale of shifting the production.
Rahul Shah
7 SCA will have a little more control because this will be now their own joint venture. Like we’ll have 50, they will also have 50, so they’ll have more control. Plus, you know, with Fila and Dom’s partnership, we’ve been able to demonstrate in certain key categories like sensitive, so let’s say art materials, that from a production perspective we can be as competitive but much more trustworthy and better quality product than China. So we would want to replicate the same Success for the 7 docks cherry as well.
Kunal Voda
Okay. And lastly, what was. What’s the current turnover? And do you think like almost everything which is getting manufactured can come to you or you’ll have to prove yourself or. And how does that work?
Rahul Shah
We definitely have to prove ourselves. You know, it’s not that everything will come come to us. Today, after almost more than a decade and a half, sort of a partnership with Sila, we’ve still not been able to get all this production because our focus always equally important to, you know, throw the dogs brand as well. So I wouldn’t say that 100% will come to India, but once we start this process, I think we can have a significant portion coming to India in the next few years.
Kunal Voda
Okay.
Kunal Voda
Okay.
Kunal Voda
Okay.
Kunal Voda
That’s it for me. Thank you, sir.
operator
Thank you. The next question is from the line of Sunny. An individual investor. Please go ahead.
Sunny.
Hello, Am I audible? Hello. Am I audible? Yeah. Hi. Hi. So I just wanted a qualitative view about number one, where do you see your new acquisitions in the foreseeable future? What are your learning from the new acquisitions like in the diaper segment or in skid or and the other companies.
Sunny.
And number two, when do you expect.
Sunny.
A bump up in your earnings given that the huge Capex you have been doing in the last two, three years?
Sunny.
So in which financial year do you.
Sunny.
See a bump up in Your earnings from the huge capex. So these are the only two questions sir.
Rahul Shah
Which we invested about nearly two years back has done a sale of YTD.
Rahul Shah
Sale of almost close to 10 crores.
Rahul Shah
On a total investment.
Rahul Shah
By both the.
Rahul Shah
Partners who put together of about 2 crores.
Rahul Shah
Wow.
Rahul Shah
Per business is doing well. When we invested in this company last year they closed last full financial year at 160 odd crores. This year we are targeting to close.
Rahul Shah
At close to 200 crores.
Rahul Shah
Pioneer, there has been a shift in the business model. Where earlier Pioneer used to do direct sales, now it gets booted to doms. Despite that the company has grown in sales. Microwood which is basically supplying material to doms, packing material to DOMS is also doing well. So overall all companies are doing well. STPL Supertraz is something which we invested very recently and this is now the first back to school season where we’ll participate through them and so but given its strategic location, the pedigree of the management and plus some amount of backward integration that we are in the process doing there, we believe this would also be a successful acquisition for us.
Sunny.
Right, right. And regarding the where do you expect the sales uptick?
Rahul Shah
So sunny, we basically, you know, the way we planned, not right now but even historically has been always to achieve a very steady growth capex and investment in capital expenditures is like an ongoing activity. During the last few years also after listing you would have seen that the sales of Tom has been, you know, very measured and grown, you know, without any company. It’s something that we’ve grown sustainably so we want to follow the same approach. So right now also while there has been some amount of delay in our new project but we believe there have been other significant investments that have been happened in our current infrastructure plus other brownfield investment that we’ve done which will support a similar sort of a growth pattern in the coming few financial years as well.
Sunny.
Right, right, right. That’s it. That’s it. Congratulations from your. My side from for great results or consistent results over these years. Thank you.
Rahul Shah
Thank you.
operator
Thank you. The next question is from the line of Ananya Nichani from Thinkwise Wealth Managers llp. Please go ahead.
Ananya Nichani
Hi. Thanks for the opportunity. I wanted to ask about unique land. The EBITDA margins in this quarter are at 12% whereas the guided range was around 7 to 8%. So I wanted to understand what caused the spike in margins and whether it’s sustainable.
Ananya Nichani
Thank you.
Rahul Shah
Hi.
Rahul Shah
So basically for Uniqlen or for the entire diaper business, you could say that the third quarter is one of the strongest quarters in terms of performance with more than about you know, 30% of sales coming in single quarter because of the winter season. And this is slightly a seasonal business where with the onset of monsoon, the business starts during peak winter. It is the highest sales and then it tapers down after wholly sort of a sale. And Q1 is almost the weakest. So in this quarter what typically happens is your fixed cost utilization is highest.
That’s the reason why you will see the EBITDA margin should be the highest in this quarter. When you consolidate the full year numbers where Q1 is weak followed by Q4 and then Q3 and Q2 and Q3 at a same level, we think this business will do about 8 to 9% annual margin.
Ananya Nichani
Thank you.
operator
Thank you. The next question is from the line of Mohsam Shah from Wealth Guardian. Please go ahead.
Mohsam Shah
Hello. Thank you for the opportunity and congratulations on a good set of numbers. My first question is regarding the Jammu Kashmir land that we have acquired. So basically around at what cost have we acquired?
Rahul Shah
We paid about 16 crores for acquisition.
Rahul Shah
Of land building and certain electrical fittings.
Rahul Shah
Which will be of use to the company. The land is spread across about two and a half plus acres with a built up area of close to 50,000 square feet.
Rahul Shah
And this is strategically located very near to our current operations in Jammu. So management would be more easier here. We plan to, you know, enhance some amount of our capacities for good and flat processing. And as well as, you know, there are certain attractive products in the fine art category also which requires some amount of process which we get from this new investment in Jammu.
Mohsam Shah
Okay, okay, thank you. And also so we are guiding for 18, 20% of revenue growth whereas in the first nine months we have already done 23%. So is this something that we have, we are very guiding limited revenue growth or are we seeing a degrowth in quarter four, being back to school season and everything?
Rahul Shah
If you would have seen the numbers, you know, in the third quarter, if you compare year on year, our growth has been about 18 and a half percent, 18.7%. This is because in the base period now starting from third quarter, the base period will always already have the, you know, the impact of the unique land acquisition. So growth can be forecasted for the full year growth of close to 18, 20%. We knew that first two quarters will be higher growth because there was no unique lens consolidation impact in the base quarters. While in the next two quarters we will have an impact of the unique lend.
So the growth percentage on A much larger sort of a base will be a little lower. But having said that, it’s not that we are looking at any sort of a degrowth. We are confident that, you know, we’ll close the year at the upper end of the guided range and at the same time continue to be a little conservative. You know that that’s normally the way how we always feel. But we are confident that we’ll, you know, achieve or reach at the upper end of the guided range.
Mohsam Shah
Okay. Okay, thank you. And also this, this quarter we have achieved the revenue we have in our revenue mix. There is a lot of higher proportion given to the increase in market. So is it because of the new acquisition STPs.
Rahul Shah
In the Eastern market?
Rahul Shah
No, no.
Rahul Shah
Typically you’re comparing sequential growth or year.
Mohsam Shah
On year, year on year, year on year.
Rahul Shah
But one of the reason is sometimes you know what happens is it really depends upon the festive season also. So if the Kurga Puja season in the fiscal year 2025 was in the third quarter, then the sales in East India becomes a little less during that period. And this year I remember that Pulga puja was actually in the second quarter. So probably that can be one reason. But otherwise there has been no of the HTPL acquisition on it. It is just that the business fundamentals are playing out. Htpl like I said, you know that now is the season where we’ll see good impact of STPL acquisition coming in.
Because one earlier it’s a new acquisition then the CSP rate change had impacted the sales of paper stationery overall. And after that during that time and currently we invested something in backward integration in terms of a printing line being set up which is already close to completion this quarter we see significant revenue, decent revenue being consolidated from HDPL to dollar.
Mohsam Shah
Okay, thank you so much and all the very best.
operator
Thank you. The next question is from the line of Aniruddha from ICICI securities. Please go ahead.
Aniruddha
Yeah, so Rahul, by two questions. 1. Commodity Price Inflation is pretty high. So how are you managing it in terms of price hike, trade spends, management or change in revenue mix, product mix? Because rather than inflation, the volatility in commodity prices is also extremely high. So that is question number one. And question number two, if you can share more details on the ESOP plan in terms of means, how many employees have got that and wasting period target whether it is in lieu of cash salaries or or bonuses or it is in addition to the cash salaries, bonuses etc.
So any. Any further details that you can share? Yeah, thanks.
Rahul Shah
So another bhai for your question, you rightly put that in the current quarter, especially from the time there have been these discussions about Greenland and Iran, there has been a significant increase in prices. The volatility has also increased. But as a company, you know, right now we are just waiting and watching whether these are sustainable or these are something which are like a temporary phenomenon. Once a month and a half, sort of a thing slows down. We will decide that if these remain sustainable then we will have to change our pricing structure either in terms of the channel margins or the MRP of the product depending on how the cost sheets pan out and how much it will increase.
So definitely this will have a little bit of impact on our margins in the current quarter, but in what extent, which we don’t know. And plus you know how we have a very large purchase basket, we’ve not seen similar increase across the purchase basket. But these are in some of the key raw materials while for some other key raw materials the prices continue to remain constant. So that’s something which we will wait and then decide on how and when to pass on any increases, if any. Secondly, in terms of esop, so another these ESOP grants that we’ve done, they we’ve done it from our existing approved ESOP scheme, which was the ESOP 2023 scheme.
From this scheme in October 2024 we had done certain grants, I think about one 17,000 odd grants had happened to about 900 plus employees. This year from the same pool we’ve granted about 137/000 of ESOPs to thousand plus employees. So basically the vesting period and time frame remains the same. This is in addition to their.
Aniruddha
Okay, sure, sure, this is very helpful and many thanks and comrades for great set of numbers. Yeah, thanks.
operator
Thank you. We’ll take the last question from the line of Anik Mitra from Phenomic Solution Private Limited. Please go ahead.
Anik Mitra
Am I audible, sir?
Rahul Shah
Yes you are.
Anik Mitra
Yeah. Thanks for taking my question. Sir. Your new means, brownfield capacity expansions and also greenfields are coming in phased manner. So what sort of revenue addition we can see over the period of time if you can guide us from another four to six quarters point of view.
Rahul Shah
Honestly right now what we are seeing right now for the coming financial year we will probably continue our growth momentum.
Rahul Shah
Of close to 18 to 20% revenue growth. Same sort of a growth that we.
Rahul Shah
Will be closing with this current financial year will be, you know, we achieve.
Rahul Shah
We’Ll try to achieve the same growth.
Rahul Shah
In the coming financial year as well. And after that, you know, we should.
Rahul Shah
Also remember that the pace on which.
Rahul Shah
This growth is being achieved is increasing.
Rahul Shah
So after that we still not made a plan of what it would. But that will depend on, you know, how the capacity buildup stands up.
Rahul Shah
And at least for next year we can say that we’ll continue the current.
Rahul Shah
Growth momentum and target to achieve a.
Rahul Shah
Sales growth of 18 to 20%.
Anik Mitra
Okay, so sir, whatever 18 to 20% you are projecting for the next year, is it like will it come from this additional capacities or is it the normal like with the current capacities.
Rahul Shah
Predominantly.
Rahul Shah
From the full utilization of the current capacity.
Rahul Shah
Because the capacity addition that has happened during the course of this year for.
Rahul Shah
The nine months, plus in the next three months, you’ll get full benefit of that in the coming financial year and.
Rahul Shah
Plus some new capacities being added in.
Rahul Shah
The coming financial year. But it will be more of a volume driven growth.
Anik Mitra
Okay, okay. And sir, with the backward integration, whatever you are doing for pencil capacities, so what sort of margin improvement we may see at full capacity utilization or optimum. At optimum level of utilization.
Rahul Shah
So I think basically, you know, we are already one of the most backward integrated companies when it comes to manufacturing of wooden pencils. So this is the new capacity addition that we might be doing for diaper.
Rahul Shah
Integration will be to support the increase.
Rahul Shah
In capacity for the main product like.
Rahul Shah
You know, now the expenses.
Rahul Shah
So I. There wouldn’t be any significant impact of this on the margin.
Anik Mitra
So we can consider margin will be as it is means it will be maintained like to maintain the margin. This capacity utilization will. Means this additional capacity will help. I got it. I got it. That’s. That was from my side. Thank you so much. Congrats for good set of numbers.
Rahul Shah
Thank you so much.
operator
Thank you. Ladies and gentlemen, in the interest of time. That was the last question. I would now like to hand the conference over to the management for the closing comments.
Rahul Shah
Thank you everyone for joining us. We appreciate your continued support and confidence in our journey. Should you have any further questions, please reach out to our investment investor relations team. Thank you and have a great day ahead.
operator
On behalf of ICICI securities limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.