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.

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.”