Key Financial Figures

  • Q1 FY27 revenue growth: 17% YoY
  • Volume growth contribution: 10%
  • Price increase contribution: 7%
  • Q1 EBITDA margin: 14.4%
  • Trade receivables balance: Approximately INR 145-150 crores as of 30th June
  • Cash position: INR 160 crores
  • Employee expenses: Increased from INR 9 crores to INR 11 crores sequentially
  • Sales promotion investment: INR 4.5 crores in Q1 (vs INR 2 crores last year)
  • Annual sales promotion expense guidance: INR 45-50 crores with 10% increase expected
  • Advertising and branding target: 6-7% of revenue

Operational Highlights

Capacity Expansion:

  • Current capacity: 2,000 tons/month
  • Expanding to 3,500 tons/month (brownfield expansion)
  • 80% work completed, expected operational within 1-2 months
  • Expected revenue potential from expanded capacity: INR 600-650 crores
  • Current utilization: 65-70%

Market Expansion:

  • Registered carpenter base: 210,000 (increased by 10,000 in last quarter)
  • Operating in 15 states across 100 cities and 65 territories
  • New market entries: Uttar Pradesh and Jharkhand
  • Planning to open one more state in Q2 FY27
  • OEM segment contribution: 6% of total revenue, targeting 10-12%

Raw Material Situation:

  • Key raw material: Vinyl acetate monomer (VAM)
  • Price volatility: From INR 75-78/kg to INR 170-180/kg in March-April, currently at INR 100/kg
  • Inventory policy: 30 days inventory, moving to 90-day contracts with suppliers
  • Price increases taken: 4% in April, 11% in May (total 7% for Q1)

Management Guidance

  • Q2 FY27 EBITDA margin guidance: 22-25%
  • Long-term EBITDA margin target: 23-25%
  • Revenue target: INR 500 crores by FY29
  • Volume growth target: 15-20% annually
  • Employee cost target: 11-13% of revenue

Capital Structure and Corporate Developments

  • Zero debt position maintained
  • NSE listing in process, expected within current quarter
  • Greenfield expansion planned with INR 45-50 crores initial CapEx (50% land, 50% construction/machinery)
  • No immediate plans for exports; focus on domestic market for next 3 years
  • Buyback discussion concluded with decision to prioritize market expansion

Working Capital Management

  • Debtor days currently above 150 days, targeting reduction to 120-130 days
  • Bad debt historically maintained below 0.5-1%
  • Exploring channel financing options
  • Focus on maintaining retailer relationships while improving collection efficiency

Distribution Model

  • Direct-to-retailer model with 54 branches across 15 states
  • Serving 13,000 retailers directly
  • Retailer margins: 7-13% depending on territory
  • Carpenter loyalty program outstanding: INR 90 crores

Conference Participants

Management Team:

  • Mr. Utkarsh J. Patel - Managing Director (DIN: 02874427)
  • Mr. Samit Shah - Chief Operating Officer

Analysts Participating: Ritika Sheth, Smith Gala, Pawan Kumar, Saket Saraogi, Vidish Asher, Indresh Malik, Dishant Shah, Saurabh Rathore, Arjun