DOLLARNSEFebruary 13, 2025

Dollar Industries Limited

4,988words
81turns
10analyst exchanges
4executives
Management on call
Ankit Gupta
PRESIDENT, MARKETING – DOLLAR INDUSTRIES LIMITED
Gaurav Gupta
VICE PRESIDENT,
Ajay Patodia
CHIEF FINANCIAL
Sumant Kumar
MOTILAL OSWAL
Key numbers — 40 extracted
rs,
r Q3 and the first nine months of FY '25, I want to extend our sincere gratitude to our shareholders, analysts and stakeholders for being with us today. Your ongoing support and engagement are invalua
INR 381 crore
re the Q&A starts so that you are aware of the same. Our operating income in Q3 FY '25 stood at INR 381 crores, marking a 14.8% year-on-year growth. Over the first nine months, operating income stood at INR
14.8%
t you are aware of the same. Our operating income in Q3 FY '25 stood at INR 381 crores, marking a 14.8% year-on-year growth. Over the first nine months, operating income stood at INR 1,161 crores, refl
INR 1,161 crore
rores, marking a 14.8% year-on-year growth. Over the first nine months, operating income stood at INR 1,161 crores, reflecting an 8.3% year-on-year growth. Additionally, total volume grew by 8.2% in Q3 FY '25 ov
8.3%
r growth. Over the first nine months, operating income stood at INR 1,161 crores, reflecting an 8.3% year-on-year growth. Additionally, total volume grew by 8.2% in Q3 FY '25 over the same quarter o
8.2%
d at INR 1,161 crores, reflecting an 8.3% year-on-year growth. Additionally, total volume grew by 8.2% in Q3 FY '25 over the same quarter of the previous year. Profit after tax for the quarter grew
12.8%
Q3 FY '25 over the same quarter of the previous year. Profit after tax for the quarter grew by 12.8% year-on-year to around INR20 crores. For the first nine months, PAT reached to around INR62 crore
INR20 crore
arter of the previous year. Profit after tax for the quarter grew by 12.8% year-on-year to around INR20 crores. For the first nine months, PAT reached to around INR62 crores, registering a year-on-year growt
INR62 crore
ew by 12.8% year-on-year to around INR20 crores. For the first nine months, PAT reached to around INR62 crores, registering a year-on-year growth of 8.2%. As we mentioned during our Q2 FY '25 earnings call,
12%
alf performance has historically outpaced our first half. We are on track to meet our guidance of 12% to 13% growth in operating income. Our focus on Project Lakshya continues to yield positive res
13%
formance has historically outpaced our first half. We are on track to meet our guidance of 12% to 13% growth in operating income. Our focus on Project Lakshya continues to yield positive results. I
26%
We are pleased to report that Project Lakshya's share of domestic sales has risen from 26% in FY '24 to 31% in nine months FY '25. Looking ahead, we expect that by FY '26, 65% to 70% of
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Guidance — 20 items
Ankit Gupta
opening
“We are on track to meet our guidance of 12% to 13% growth in operating income.”
Ankit Gupta
opening
“Our focus on Project Lakshya continues to yield positive results.”
Ankit Gupta
opening
“We are pleased to report that Project Lakshya's share of domestic sales has risen from 26% in FY '24 to 31% in nine months FY '25.”
Ankit Gupta
opening
“Looking ahead, we expect that by FY '26, 65% to 70% of our revenue will be contributed by distributors under Project Lakshya.”
Ankit Gupta
opening
“To further enhance our reach and product range, we are excited to announce that we have expanded Project Lakshya into three new states, Madhya Pradesh, Himachal Pradesh and Jharkhand.”
Gaurav Gupta
opening
“We had also set a target to achieve a contribution from these channels in the range of 8% to 10% by the end of FY '26.”
Gaurav Gupta
opening
“However, we have reached the target more than a year ahead of schedule.”
Ajay Patodia
opening
“This performance aligns with our target of achieving 12% to 13% growth in operating income as outlined by Ankitji.”
Ajay Patodia
opening
“The continued success of our Project Lakshya and our growing footprint in the South Indian market additionally, the increasing contribution from modern trade channel is poised to fuel our performance in the upcoming quarters.”
Bhargav
qa
“And lastly, any guidance you would want to give for next year?”
Risks & concerns — 1 flagged
What are some of the reasons for the 180 bps year-on-year decline in the gross margins that we saw?
— Arnav Sakhuja
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Q&A — 10 exchanges
Q
Sir, my first question is on working capital. So if you look at the revenue coming in from the Lakshya areas, it has increased from 26% to almost 31% on a Y-o-Y basis. However, the working capital days have increased from 155 to 171 days. So just wanted some clarification on this plan?
Ankit Gupta
So the overall increase in the net working capital days is because -- mostly because of the inventory days. There is not much movement in the debtor days, I would say. And inventory, we had to stock up like the -- for the Q2 and Q3, it was mostly the summers, which was stocked up. And since our Q4 is quite heavy, we have to build inventory in advance. So it's just seasonality thing. On a year-on-year basis, I think it would come down. Like if we look at it at the end of the fiscal year, like March '25, we would see a lower level of inventory days. So that would reduce your overall net working
Q
I had a question again regarding the working capital and Project Lakshya. So we are planning to go from around 31% revenue contribution to 70% in 15 months. Is there some more guidance you can provide on how the company will achieve it given that it is more than doubling in a very short span of time and seems, in a way, ambitious? And my second question is, you said that we would see the number come down when it comes to your working capital days. Is there some number you could provide? Would it be lower than what it was last year at the same time? Or would it be lower from the current, what y
Ankit Gupta
So for Lakshya, we are very hopeful. And internally, we really aspire to achieve 65% to 70% kind of contribution level coming in from Lakshya Project. And also, we are in the process of hiring a good level business head for this particular project who will work in line with Vector Consultancy also. And by adding a few more states into this particular project, we are quite hopeful and we really aspire to reach at that level in FY '26. With regards to working capital cycle, once the majority of our sales contribution starts coming in from Lakshya Project, there will be a downward trend that we w
Q
Sir, our growth rate in e-commerce is pretty good. Are we doing anything for quick commerce as of now?
Ankit Gupta
Yes. So for quick commerce, we have already enrolled ourselves in Swiggy Instamart. We are present in Zepto also. And we are on the verge of completing our agreement with Blinkit. And plus with the marketplaces like Flipkart, Amazon and Myntra coming up with their own quick commerce department and channels, we are already doing business with Flipkart, which is by the name of Minutes, and Myntra also has been started very recently with the quick commerce department. And are we getting good traction as of now? See, in e-commerce, online sales, it takes time to get visibility to create traction.
Q
So my one question is, sir, that in the last call, you had mentioned that we are now completely done with our capex. Is that understanding still correct?
Ajay Patodia
Yes. Mostly our capex, which we announced earlier in '21-'22 with regard to our factory and the spinning plant, we already completed. And we also capitalized in the month of December only. So almost our announced capex plan is already almost completed. Now there is only a pending 2, 3 megawatt solar capacity we have to add in the coming 6 to 12 months. Sure. So given that you all have already guided that we will look to reduce our cash conversion cycle and look to improve our margins in the next 15 to 18 months, sir, what kind of free cash flow generation or debt reduction that you think we ca
Q
Can you tell us a bit about the joint venture agreement that you have entered to with G.O.A.T Brand Labs?
Ankit Gupta
Yes. So this year, this particular fiscal has been really good with our JV company, Pepe Innerfashion Private Limited. Last year, for nine months ended, we had a revenue of somewhere around INR10 crores to INR11-point-something crores. But this year, nine months ended, we have doubled our sales. Currently, we are standing at around INR26 crores. And for the first time, this is a first time -- first fiscal year where we are seeing good profitability also coming in with an overall EBITDA of around INR5 crores in INR26 crores sales. I just had one more question. What are some of the reasons for t
Q
I just had one question on Project Lakshya. So we have started in three new states, which is Himachal Pradesh, Jharkhand, and Madhya Pradesh. So I just wanted to know what will be the contribution of these states in our revenue?
Ankit Gupta
So we have started the states and it's at a very initial stage. The distributors are getting stabilized also. Currently, there are around two to three distributors in Madhya Pradesh who have been transformed into Project Lakshya. In Himachal, due to bad weather in Q3, we were only able to roll out just one distributor. In Jharkhand, we have done around three to four distributors over there. So it's very -- it's at a very initial stage so as to comment on that. Not much of a contribution, I would say, has come in from these states right now. It would be very, very miniscule. In terms of total r
Q
I just wanted to check considering the competitive intensity in the economy segment, what are the growth levers that you see to reach the top line of INR2,000 crores by FY '26?
Ankit Gupta
Sorry, your voice was a bit muted. Can you just repeat the question? So considering the competitive intensity in the economy segment, what are the growth levers you think that could help you reach the top line of INR2,000 crores by FY '26? So we have a premium segment called Force NXT Brand, which is doing really well. So it has good EBITDA levels. The overall average selling price is also on a higher side. And it is growing at a rate of 20%, 25% on year-on-year basis right now. So we are expecting a very good growth coming in from Force NXT. Then the new Dollar Protect Rainguard that we launc
Q
Congratulations for the good set of numbers. So my first question is like you mentioned on the call, we are expecting our working capital to reduce from the current level to 130, 135 days. And already our Project Lakshya is contributing 31% of revenue. And the difference between Project Lakshya and normal receivables is around 25 days. So I expect if it goes to 60%, 70%, then 10, 15 days reduction will come from Project Lakshya. Remaining 20 days or 15 days reduction you are expecting from what efficiencies? Can you please help me with that?
Ajay Patodia
Actually, in this quarter, generally in December quarter, our inventory days is very high. Currently, it is around 127 days. But generally, our inventory is around within 95 to 99, 100 days only. As we have the future target to achieve in quarter four. We have built the inventory because if we not -- we have not inventory, then we cannot achieve our sales revenue for the next quarter. So if you analyze all the last three, four years, our inventory days in the month of December has increased and it is now reduced at the end of the quarter four by March '25. So we expect 10 to 15 days reduction
Q
So I just had a question about the Lakshya Mission itself. So currently, there is around 10% contribution that is coming from the new states that you have added, Madhya Pradesh, Himachal Pradesh, and Jharkhand. And the contribution from Lakshya overall is 31%, as you have said. How does that add up to you getting to 65% to 70% in just one year's time, so around 12 to 15 months?
Ankit Gupta
So there are some states which are ongoing, like Northeast is an ongoing project. Bihar is an ongoing project. These three states are there. After that, we are making changes, like Maharashtra is an ongoing project. Maharashtra alone contributes around 15% to our total sales. So that's an ongoing project. So these are some of the states which are ongoing and plus these three new states taken together, I think -- and yes, from April, we might add one or two states more into this particular project. Okay. And is there any specific number of distributors adding that you are targeting? See, withou
Q
Thank you all for taking the time out to join the earnings call. Have a good day. Thank you, everyone.
Ajay Patodia
Thank you, everyone.
Speaking time
Ankit Gupta
25
Moderator
12
Ajay Patodia
12
Vijay Shah
5
Yog Rajani
4
Tejal Nagmoti
4
Yash Sonthalia
4
Bhargav
3
Swapnil Upadhyay
3
Arnav Sakhuja
3
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Opening remarks
Sumant Kumar
Thanks. Good afternoon, everyone. On behalf of Motilal Oswal, I welcome everyone to Dollar Industries 3Q FY '25 Earnings Call. We have the pleasure of having with us the senior management team of Dollar Industries, led by Mr. Ankit Gupta, President, Marketing; Mr. Gaurav Gupta, Vice President, Strategy; and Mr. Ajay Patodia, CFO. Without further delay, I would like to hand over the floor now to Mr. Ankit Gupta. Over to you, Ankit.
Ankit Gupta
Thank you, Sumant. Good afternoon, everyone, and a warm welcome to you all. Thank you for joining us today for the Dollar Industries Limited Q3 FY '25 Earnings Investor Call. Gaurav and I will walk you through the business and operational highlights of the quarter and the first nine months of the fiscal year, while our CFO, Mr. Ajay Patodia, will share the financial metrics. Before we delve into the financial results and operational highlights for Q3 and the first nine months of FY '25, I want to extend our sincere gratitude to our shareholders, analysts and stakeholders for being with us today. Your ongoing support and engagement are invaluable as we navigate the opportunities and challenges in our industry. Also, I would like to draw your attention to the Safe Harbor statement in the earnings presentation. I request each one of you to go through the presentation either now or before the Q&A starts so that you are aware of the same. Our operating income in Q3 FY '25 stood at INR 381 c
Gaurav Gupta
Thank you, Ankit. Good afternoon, everyone, and a warm welcome to all of you. Dollar Thermal accounted for 14% of our operating revenue in Q3 FY '25. Thermal segment experienced remarkable year-on-year growth of 46% in value and 41% in volume. Over the first nine months of FY '25, Thermal segment achieved year-on-year growth of 20.8% in value and 19.5% in volume, reaching total sales of INR101 crores, contributing to 8.6% to our operating revenue. In Q3 FY '25, Force NXT brand saw a year-on-year increase of 13.8% in value and 23.3% year- on-year in volume. For the first nine months of FY '25, Force NXT achieved a year-on-year growth of 14.4% in value and 18.8% in volume. For nine months FY '25, the Southern region contributed to 8.3% to our operating income with a 5% year-on-year growth. To enhance our presence in the Southern Indian market, we had onboarded the renowned actor Mahesh Babu as a brand ambassador for Dollar Bigboss in the current fiscal year. Our efforts to drive growth i
Ajay Patodia
Thank you, Gauravji. Good afternoon, everyone, and thank you for joining us for quarter three and nine months FY '25 earnings call. Before we begin the question-and-answer session, I would like to provide a brief overview of our financial performance for the quarter. I trust that everyone has had the opportunity to review the earnings presentation and press release. While Ankit Ji has already provided insight into the macro-outlook, I will now delve deeper into our financial performance over the past quarter. Our revenue from operations increased by 14.8% year-on-year to around INR380.73 crores in quarter three FY '25, up from INR331.55 crores in quarter three FY '24. For the first nine months FY '25, our revenue from operations reached around INR1,161.33 crores, marking an 8.3% year- on-year increase. This performance aligns with our target of achieving 12% to 13% growth in operating income as outlined by Ankitji. Our gross profit for quarter three FY '25 reached around INR135.46 cror
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