Summary
Duroply Industries Limited - Q3 FY26 Earnings Call Summary Wednesday, February 4, 2026 10:00 AM
Event Participants
Executives 2 Akhilesh Chitlangia (MD & CEO), Vijay Kumar Yadav (CFO)
Analysts 3 Ashvath Rajan, Hena Mohra, Nishita Shanklesha
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹93.05 crores | +3.6% YoY, -11% QoQ; impacted by environmental construction restrictions in North India. |
| In-house Revenue | ₹60.7 crores | +11.6% YoY, +15% QoQ; driven by a strategic shift toward premium product manufacturing. |
| Contract Mfg Revenue | ₹32.3 crores | -8.7% YoY, -37% QoQ; decline reflects deliberate shift to favor in-house premium goods. |
| Gross Margin | 37.1% | +290 bps YoY, +230 bps QoQ; improvement due to higher mix of in-house premium sales. |
| EBITDA | ₹5.4 crores | +23.7% YoY, -16.4% QoQ; annual growth driven by margin expansion despite volume headwinds. |
| EBITDA Margin | 5.8% | +90 bps YoY, -40 bps QoQ; lower sequentially due to fixed cost absorption on lower volumes. |
| Profit Before Tax | ₹1.37 crores | +13.7% YoY; growth sustained by operational efficiencies and premiumization. |
| Cash Conversion Cycle | 125 days | Comparison to 9M FY25; reflects credit tightness and higher inventory days. |
| Debtor Days | 45 days | Up from 43 days YoY; company maintaining strict discipline on credit terms. |
| Inventory Days | 182 days | Up from 165 days YoY; higher holding levels compared to previous nine-month period. |
| ROCE (Annualized) | 11.85% | +121 bps YoY; improvement driven by better profitability and asset utilization. |
Geographic & Segment Commentary
- North India (Delhi/NCR): This region contributes 55-60% of total revenue and faced significant headwinds this quarter. The “GRAP” environmental restrictions and pollution-related construction bans resulted in approximately 14-15 lost working days, tightening channel liquidity.
- In-House Premium Segment: Management observed strong traction in premium products, which grew 15% sequentially. This segment is the primary driver for the company’s gross margin expansion and represents the core of their “manufactured-in-house” strategy.
- Outsourced/Contract Manufacturing: This segment saw a deliberate reduction as the company prioritizes fiscal discipline and its own manufacturing capacity. The revenue mix moved to 64% in-house vs 36% contract manufacturing this quarter.
Company-Specific & Strategic Commentary
- Premiumization & Mix Shift: The company is aggressively shifting from a 60:40 to a 65:35 in-house vs. outsourced revenue mix to capture higher margins. In Q3 FY26, in-house manufacturing reached 64% of total revenue.
- Fiscal Discipline: Management is prioritizing cash flow and debtor quality over raw volume growth, refusing to chase revenue at the cost of credit risk. This is a response to tight liquidity among channel partners in the building materials space.
- Regulatory Environment (QCO): Quality Control Order (QCO) norms implemented in early 2026 have restricted cheap imports, leading to a slight revival of the unorganized domestic sector in hubs like Yamuna Nagar.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| EBITDA Margin | 6.0% - 6.5% for FY26 | Expected recovery in Q4 driven by better revenue and sustained gross margin improvements. |
| Revenue Mix | 65% In-house by FY27 | Management aims to continue the shift toward higher-margin in-house premium products. |
| Demand Outlook | Recovery in Q4 FY26 | Construction activity in North India is expected to normalize following the lifted pollution bans. |
Risks & Constraints
| Risk | Context |
|---|---|
| Environmental Bans | Periodic construction halts in Delhi-NCR (GRAP restrictions) directly impact 60% of the company’s core market, affecting both sales and channel cash flows. |
| Raw Material Inflation | While timber prices have stabilized, a strengthening USD could inflate the cost of imported wood veneers, putting pressure on margins. |
| Competitive Intensity | The branded plywood space has become hyper-competitive as players vie for market share following the restriction of cheap imports via QCO norms. |
Q&A Highlights
Manufacturing Mix & Margins
- Question: What is the update on moving toward premium products and in-house manufacturing? (Nishita Shanklesha)
- Answer: In-house revenue grew 15% QoQ to ₹60.7 crores, while contract manufacturing fell to ₹32.3 crores. This shift is the primary reason for the gross margin expansion to 37.1% (Akhilesh Chitlangia).
EBITDA Guidance
- Question: Will you reach the previously guided 6.5% EBITDA margin given this quarter was only 5.8%? (Nishita Shanklesha)
- Answer: The company expects to end the year between 6.0% and 6.5% due to improved Q4 revenue and stable gross margins (Akhilesh Chitlangia).
Import Impact & QCO Norms
- Question: How are you hedging against the risk of imported finished goods? (Ashvath Rajan)
- Answer: QCO norms implemented in Feb/March 2026 have significantly reduced imports. This has actually led to a “slight revival” in the domestic unorganized sector rather than just helping branded players (Akhilesh Chitlangia).
Timber & Raw Materials
- Question: When will we see timber prices soften? (Hena Mohra)
- Answer: Prices have stabilized but are unlikely to soften significantly. Potential Rupee weakness against the Dollar remains a “fragile” risk for wood veneer costs (Akhilesh Chitlangia).
North India Demand
- Question: Why isn’t secondary demand translating to primary revenue? (Hena Mohra)
- Answer: Secondary sales are higher than last year, but primary growth is lagging due to 14-15 lost working days in NCR from pollution bans and the company’s strict credit discipline with channel partners (Akhilesh Chitlangia).
Key Takeaway
Duroply Industries Limited reported a resilient Q3 FY26 with revenue of ₹93.05 crores, growing 3.6% YoY despite severe construction halts in its core North India market due to environmental restrictions. The quarter was defined by a successful strategic pivot toward premiumization, with in-house manufactured goods rising to 64% of the mix and driving gross margins up to 37.1%. While liquidity in the building materials channel remained tight, the company maintained fiscal discipline, opting for a 125-day cash cycle over aggressive volume expansion. Management remains confident in achieving a 6.0-6.5% EBITDA margin for the full year as North Indian demand recovers. Investors should watch for the sustainability of premium product traction and potential raw material volatility linked to currency fluctuations in the coming quarters.
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