Dollar Industries hosted a conference call
on February 7, 2024. In the conference call, the company was represented by Mr Ankit
Gupta –President, Marketting, Ajay Patodia-CFO and and Mr Gaurav Gupta
–Strategy.
Key
takeaways of the call
Total income increased 16.4% YoY to Rs 333
crore in Q3FY2024. Total volume grew 30.4% YoY in Q3FY2024 and 23.4% yoy for
9MFY2024.
Net profit grew by 128.9% YoY to Rs 17.7
crore in Q3FY2024.
The company has emerged stronger from the
challenges of FY2023, raw material prices being stabilised and no high cost
inventory within the system.
Gross margins expanded 375 bps to 33.9% in
Q3FY2024. Q3 is usually a seasonally weaker quarter and this was further
impacted by delays in seasonal winter in FY2024.
Cash conversion cycle reduced to 155 days
in Q3FY2024 as against 170 days in Q3FY2023 largely attributed to reduction in
inventory holding period by 14 days. This is on account of removal of high
value inventory from the system.
The company plans to reduce the working capital
cycle to 120 days by FY2026 by reducing receivable days to 66 and inventory
days to around 95 days.
Advertisement expenses stood at Rs 19 crore
in Q3FY2024 as against Rs 20 crore in Q3FY2023. The company will maintain
advertisement expenses at 6-6.5% of the top line.
The company mid segment contributed 38% of
the total revenues, economy contributed 36%, thermal contributed 10.6% and
Dollar nxt contributed around 4% of the total revenues in Q3FY2024. Strategic decision to appoint Saif ali khan
as brand ambassador for brand ‘Dollar always’ has yielded results with economy
segment growing 24% YoY. Volume also grew by 35% YoY in this segment.
Force NXT grew by 60% in value terms and 54%
in volue terms YoY in Q3FY2024.
Total income for 9M FY2024 grew by 8.5% YoY
and Net profit grew by 9.8% YoY in 9MFY2024.
Modern trade and e-commerce sales stood at
7.5% in Q3FY2024 and 4.4% in 9MFY2024 of the total sales and the company plans to increase the
same to 8% by FY2026.
Solar
capacity: With the commissioning of new plant, the
company has increased the capacity from 75 lac units per annum to 100 lac units
per annum. Project
Lakshya: The company added 9 new distributors in
Q3FY2024 taking the total to
280 distributors under project Lakshya.
The contribution from project Lakshya has
increased from 19% of the domestic revenue in FY2023 to 27% in 9MFY2024 and 29% in
Q3FY2024.
Presently the company has project Lakshya
distributors in 13 states. Revenue contribution from Rajasthan is around 10%
and Haryana is 6%. In Rajasthan on
account of project Lakshya revenues increased from Rs 88 crore to Rs 140 crore
and in Haryana the growth is around 40% YoY. In Gujarat revenue contribution
has increased from Rs 25 crore to Rs 55 crore on account of the project.
The company expects project Lakshya to
contribute 65-70% of the revenues by FY2026. The growth will be achieved on
account of both reach and the range.
Price: The company expects prices to bottom out in Q2FY2025 and then start
increasing.
Outlook:
With early EID and achievement of project Lakshya,
the company anticipates to grow revenues by 11-12% in Q4FY2024. The company
expects volume growth of around 18-19% in Q4FY2024.
Strong revenue outlook coupled with stable
raw material prices and strong push towards premimization will help company
sustain and grow margins.
The company expects revenue growth of
12-13% in FY2025 of which 4-5% will be through value and the balance through
volume.
The company targets to achieve revenues of
Rs 2000 crore in FY2026
The company maintains EBITDA margin of 11%
for FY2024.
The company targets EBITDA margin of 12-13%
in FY2025 and 13-14% in FY2026.
Management Commentary:
Commenting on the results, Mr. Binay Kumar
Gupta and Mr. Vinod Kumar Gupta, Managing Directors, Dollar Industries said: “We
are happy to announce that the company achieved strong all-round growth in the
quarter gone by. Total Income increased by 16.4% year-over-year (YoY) reaching
₹ 33,278 Lacs in Q3 FY24. Additionally, the company achieved a notable volume
growth of 30.4% YoY.
Gross profit grew 30.7% YoY to ₹ 11,230 Lacs,
as GP margin expanded by 375 bps to 33.9%, whereas EBITDA grew sharply by 69.6%
to ₹ 3,385 Lacs. EBITDA margin expanded by 319 bps YoY, crossing the 10% mark.
The company achieved PAT of ₹ 1,771 Lacs, up by
128.9% against the same quarter of the previous year, registering a PAT margin
of 5.3%.
The company remains steadfast in its commitment
towards continued growth and success of Project Lakshya, and we have added 9
distributors under this project in Q3 FY24. The contribution of Project Lakshya
distributors stood at 26.5% in 9M FY24, up from 18.6% in FY23. We are aiming
for Project Lakshya distributors to contribute 65-70% of our revenue by FY26,
and this will go a long way in increasing our market share and improving
margins.
Your company continues to witness strong demand
and growing share of higher margin products, which should enable us to achieve
the desired topline and bottom-line growth in the near future as well.”
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