Duroply Industries Ltd (NSE: DUROPLY) Q2 2025 Earnings Call dated Nov. 13, 2024
Corporate Participants:
Navin B. Agrawal — Head, Institutional Equities
Akhilesh Chitlangia — Managing Director and Chief Executive Officer
Pawan Kumar Verma — Chief Financial Officer
Presentation:
Navin B. Agrawal — Head, Institutional Equities
Good morning, ladies and gentlemen. I am pleased to welcome you on behalf of Duroply Industries Limited and SKP Securities to the Duroply Industries Limited’s Q2 FY25 Result Webinar. We have with us Mr. Akhilesh Chitlangia, MD and CEO; and Mr. Pawan Kumar Verma, CFO. This webinar is being recorded for compliance reasons. During the discussion, certain forward-looking statements must be viewed in conjunction with the risks that the company faces. We will have the opening remarks from Mr. Chitlangia followed by a Q&A session.
Thank you, and over to you, Akhilesh.
Akhilesh Chitlangia — Managing Director and Chief Executive Officer
Good morning, everyone. Thank you, Navin, and a warm welcome to everyone, and thank you for attending our webinar today for the second quarter and half year ended FY25. Founded in 1957, Duroply has over the years built a strong brand in the industry and is recognized across the country for its high standard of quality, which we have maintained over the years. Duroply recently celebrated the start of its 68th year in operation and we are proud to have played a small but meaningful part in India’s growth story for over the last six decades. The company continues to be focused on expanding its reach, both in existing and new markets with vigor.
In the fourth quarter of FY24, the Board of Directors approved the infusion of INR43.9 crores of equity by the way of preferential allotment of equity shares and warrants. Of this, INR28.9 crores was received end of March against the preferential allotment of equity shares and 25% of the warrants issued. With this infusion, over the last two years, the company’s balance sheet will be strengthened by over INR72 crores of net worth infusion. This is allowing us to rapidly scale the business and looking forward to more improved margins.
On the business front, during Q2 FY25, Duroply reported a revenue of INR90.81 crores, an increase of 9% from the same period last year, up 7% from quarter one FY25. This also marks our all-time highest quarterly revenue. The business reported a profit before tax of INR1.15 crores. On a year-on-year basis for the quarter, our PBT increased by 16.3% from INR99,00,000 in Q2 FY24. On a quarter-on-quarter basis, we saw a decline of our PBT by 9%, down from INR1.26 crores at the end of Q1 FY25.
For the quarter, revenue from in-house manufacturing in Rajkot stood at INR56.29 crores, up by 14% year-on-year basis and a growth of 13.7% on a quarter-on-quarter basis. Revenue from outsourcing stood at INR34.52 crores, a growth by 2% year-on-year and down 2% quarter-on-quarter. Our gross margin saw an improvement, ending at 35.6% as compared to 33.9% in the same quarter last year, and up from 34.1%, which is what we achieved in Q1 FY25. EBITDA margin in absolute terms stood at INR4.11 crores for Q2 FY25, up by 8.8% on a year-on-year basis against the same period and up 2.6% on a quarter-on-quarter basis. In terms of percentage of sales, EBITDA stood at 4.5% of sales, same as that for the same quarter
Last year, but marginally down from 4.7% from Q1 FY25.
The employee expenses stood at 10.8% of sales for the quarter, marginally lower from 11.2% quarter one. We are looking to invest in expanding our team across India to better cater to demand. This investment will bear fruit in the coming years. It’s one of our key initiatives, as we had mentioned in our last call as well, was to build on our existing sales team, quickly expand in the market. The team building activity is going on strongly and expected to give us dividends in coming quarters. Marketing spend stood moderated at 3.9% of sales in Q2 FY25, up from 3.3% in Q1 FY25, and 3.5% for Q2 FY24.
In terms of half year, we saw our revenue stand at INR175.6 crores, up by 10.4% and profit before tax stood at INR2.4 crores for the period ended, down 12.2% on a year-on-year basis. Again, revenue from in-house manufacturing saw a rapid growth of nearly 9.4% over last year’s same period, and revenue from contract manufacturing for half year stood at INR69.8 crores, a growth of 11.8%. Gross margins for the half year ended stood at 34.9% as compared to 33.9% in H1 FY24, and EBITDA margins stood at INR8.11 crores, virtually the same as the same period last year, but in terms of percentage of sales, it stood at 4.6%, down from 5.2% same period.
In terms of product mix, our premium segment brand, Duro, saw a growth of 11.2% growth on a year-on-year basis for the second quarter FY25 and an 8.3% growth on a quarter-on-quarter basis. However, our mid-segment offering Tower brand saw a slowdown with only a 1% quarterly growth on a year-on-year basis, and down by 1.2% on a quarter-on-quarter basis. This is something that we are working extensively on resolving and having it back in the strong growth direction.
Now, I would request Mr. Pawan Kumar Verma, our CFO, to take you through some of the other numbers.
Pawan Kumar Verma — Chief Financial Officer
Thank you, sir, and good morning to everyone. Let me take you through some of the key financials for the last quarter. For the quarter, our gross margins stood at 35.6% as compared to 34.1% in the previous quarter. Same quarter last year, our gross margin stood at 33.9%. Employee cost for the quarter has been 10.8% of the sales as compared to 11.2% in Q1 FY25. The same figure for the last quarter Q2 ’24 was 10%. Marketing spend has been at 3.9% of sales as compared to 3.3% of sales in Q2 FY25 and 3.5% of sales in Q1 FY24.
Interest cost as a percentage of sales stood at 2% of sales as compared to 2.3% of sales same quarter last year, and 2% of sales in Q1 FY25. Our debtor days stood at 42 days, up from the average of 39 days in the last year. Inventory days has also increased to 156 days of consumption as compared to 149 days of consumption, largely on account of build up of finished goods inventory. Creditor days continued to see further decrease to 76 days as compared to 109 days of the consumption. As a result, the cash conversion cycle has been increased to 122 days in H1 FY25 from 79 days in FY24. Thank you.
Akhilesh Chitlangia — Managing Director and Chief Executive Officer
Thank you, Pawan. So, Q2 FY25, for us, we saw a growth in our premium Duro segment and also a rapid increase in our manufacturing base in Rajkot. This is also reflected in a strong improvement in our gross margins. However, there was a slowdown in our mid-segment market and we are also continuously investing in our team strength and infrastructure across the country and, therefore, our margins were slightly moderated. We continue to work closely with all our stakeholders, customers, influencers, channel partners and suppliers as we build a stronger Duroply. And with this intent, I am sure the future of Duroply is bright.
And that’s all from our end. We would be happy to take any questions that you may have.
Questions and Answers:
Navin B. Agrawal
Friends, we now open the floor for the Q&A session. Anyone wishing to ask a question, request you to raise your hand. Friends, anyone with a question, please raise your hand and we’ll be happy to take it. Friends, anyone having a question, please raise your hand and we’ll take your question. I guess, the opening remarks have been elaborated enough to cover most of the investor concerns. Since there are no questions, request Akhilesh to — request Akhilesh for his closing remarks.
Akhilesh Chitlangia
Sure, Navin. So, thank you, panelists, ladies and gentlemen for joining us for the Q2 FY25 earnings call. We believe in India’s story and that we are significant — and there will be significant demand for home interiors. The strength of our brand gives us confidence that we will grow and play a large part in this growth story. For us, as mentioned earlier, the journey has just started and there’s a long way to go. Look forward to seeing all of you at the next earnings call. Thank you.
Navin B. Agrawal
Thank you very much, Akhilesh and Pawan. We look forward to hosting you again for the next quarterly webinar. Thank you, and have a wonderful day. Bye-bye.
Akhilesh Chitlangia
Thank you, Navin.
Pawan Kumar Verma
Thank you, everyone. Thank you.