DOLLAR - Dollar Industries Limited Share Price

In the Q4 FY25 earnings call, Dollar Industries management provided a positive outlook for FY26, forecasting a volume growth of 11% to 12% without factoring in price increases. They anticipate an EBITDA margin improvement to the range of 12% to 13%. The focus on premium products has been a significant driver, with categories like Dollar Protect and Force NXT showing volume growth of 40.3% and 13.4%, respectively, in FY25.

For FY26, the company plans to cap advertising expenses at approximately INR 90-95 crores, representing 5% to 5.5% of revenue, which is expected to support margin expansion. The gross margin is currently around 33.5%, with potential for a 0.5% to 1% improvement due to stable raw material prices.

Management also highlighted the success of their joint venture with Pepe Jeans, which recorded a profit after tax of INR 5 crores in FY25, marking a turnaround from a loss the previous year. Modern trade and e-commerce channels have been a growth driver, seeing 63% value growth and 67% volume growth year-on-year.

The company plans to reduce overall working capital days by 10 to 12 days in FY26, with a long-term target of achieving around 125 to 130 days. Management remains optimistic about the ongoing Lakshya project, which is aimed at improving distributor and retailer engagement.

Overall, the company expressed confidence in achieving a revenue target of INR 2,000 crores by FY27, while committing to sustainable profitability through strategic initiatives and cost rationalization.

Major Q&A from Dollar Industries Limited Q4 FY25 Earnings Call

1. Question: What would be our guidance for FY '25, '26 in terms of revenues and margins? Answer: We confidently project achieving a volume growth of around 11% to 12% for FY '26, with an EBITDA margin in the range of 12% to 13%.

2. Question: What exactly is going to be leading to this EBITDA margin expansion? Answer: We're capping our advertisement expense for FY '26 at about INR90 crores, which will help increase our margin. Additionally, we plan to rationalize fixed costs and reduce overall working capital, improving cash flow and alleviating financial burdens.

3. Question: Any guidance on gross margins? Are we seeing any input cost pressure? Answer: Currently, raw material prices are stable. We're aiming for an annual gross margin around 33.5%, with potential improvement of up to 1%, but no more than that at the moment.

4. Question: Why has the number of active Lakshya retailers remained flattish? Answer: We see good traction in the Lakshya project, with current active retailers around 78,000, a slight increase. I'll verify the numbers, but the enrollment of distributors has increased, and we're optimistic about future growth.

5. Question: How much of a push will dealer financing provide in reducing debtor days? Answer: Currently, debtor days are about 111 days overall. For Lakshya distributors, they are around 80-85 days, while non-Lakshya ones are at about 120 days. Our goal is to minimize this gap and improve overall debtor days.

6. Question: What has been the full-year FY '25 performance of the Pepe joint venture in terms of revenues and margins? Answer: The joint venture reported revenue of INR34 crores and a PAT of INR5 crores, indicating a significant turnaround from last year's loss, thanks to enhanced focus on e-commerce and modern retail channels.

7. Question: How many new states will we target under the Lakshya project this fiscal year? Answer: This year, we're expanding the Lakshya project to Jharkhand and completing efforts in Odisha and Bihar. We're also planning to start in Madhya Pradesh during this fiscal year.

8. Question: What are the expectations for working capital improvements this year? Answer: We target a reduction of around 10 to 12 days in our overall net working capital cycle this fiscal year, with aspirations to eventually lower it to around 130 days.

9. Question: What will be our capex guidance for FY '26? Answer: We do not plan significant new capex in the next 2 to 3 years. Maintenance capex for EBOs will be minimal, projected between INR5 crores to INR10 crores.

10. Question: How is competitive intensity in the market affecting us? Answer: While competitive intensity remains high, we believe it will eventually subside. Our current guidance of 11% to 12% volume growth is achievable through strategic adjustments and consistent marketing efforts.