Dhabriya Polywood Ltd Q2 FY2024 Concall Summary

Key Takeaways

• Sharp earnings recovery, real-estate tailwind: H1 EBITDA doubled YoY and PAT rose 140%, driven by a real-estate upswing, input-price normalization, and a fast-growing fluted-panel segment that now carries better margins.
• Order book doubled to ₹120 crores: The unexecuted order book moved from ~₹100 crores in March to ~₹120 crores now, with ₹60 crores executed and ₹60 crores of fresh orders added in the period.
• Fluted panels are the margin engine: Revenue from this patented, design-led product jumped from ~₹3 crores in H1 FY23 to over ₹10 crores in H1 FY24, and management expects it to double again next year.
• Modular furniture and exports are small but strategic bets: A European export tie-up is shipping containers, and two owned retail stores are live, but management declined to quantify the revenue, calling it "not that much."
• What to watch next quarter: Whether the promised H2 margin improvement materializes into a firm number, the pace of fluted-panel capacity rollout in Bangalore, and any update on modular furniture scale.

Demand & Order Book

• Real-estate cycle driving volumes: A good upswing in real estate is directly contributing to business growth, with UPVC windows and doors sold directly to large builders like DLF, Mahindra Lifespaces and L&T through a tender-based repeat model.
• Service as a moat in project sales: UPVC products are installed at the final finishing stage, when handover is 1–3 months away, making timeline adherence critical for builders. Management says the company is "very much strong in service," which wins repeat orders.
• Order book build-up: The unexecuted order book stands at ~₹120 crores, up from ~₹100 crores in March, after executing ~₹40 crores and adding ~₹60 crores of new orders.
• Pricing is customized, not commoditized: All orders are priced as customized solutions, with past experience and cost structures informing each bid, which helps protect margins in project work.

Hitesh Agarwal: "We are very much strong in service because in real estate, when we are supplying UPVC windows and doors, it comes on the last stage... when the handover is just one month or two months or three months ahead. So, the timeline is very important for the builders and developers."

Fluted Panels: The Margin Story

• Revenue trajectory: Fluted-panel revenue grew from ~₹3 crores in H1 FY23 to over ₹10 crores in H1 FY24. Management expects ~₹25 crores for the full year and a doubling next year.
• Margin contribution: Fluted panels carry better margins than the legacy product mix, and their growing share is a key driver of the consolidated margin improvement from 9% to 14%.
• Manufacturing expansion: Extrusion has begun at Coimbatore (previously only Jaipur), and Bangalore is targeted to start fluted-panel extrusion in 4–5 months, which will support the demand that management expects to "increase multi-fold."
• Design-led competitive edge: The company holds a routine design patent for the fluted-panel technology and claims the highest number of designs in the market, which it sees as a defensible advantage even as technology becomes more widely available.

Digvijay Dhabriya: "The biggest achievement we feel is the, first time we have introduced this product in Indian market and now China is copying the same product."

Modular Furniture & Exports

• Two channels, early stage: Modular furniture sells through two owned retail stores under the Studio Arezzo brand (Jaipur and Gurgaon) for individual homeowners, and directly to large builders for complete kitchens, wardrobes and vanities.
• Export tie-up with a European group: The company recently tied up with a European group for modular furniture exports, a new category beyond its earlier exports of DStona sheets and mouldings. Seven or eight containers have shipped this fiscal year, with 20 more in process.
• Margins are higher but capital-intensive: Modular furniture carries higher margins than other products because it is a totally customized solution, but it also requires more manpower and financial involvement.
• Scale remains undisclosed: When asked for revenue figures from the two stores, management declined, saying "it's not that much revenue. We can't put up the figure as of now."

Margins & Input Costs

• H1 margin walk: Consolidated margins improved from 9% in FY23 to 14% currently, helped by revenue growth, normalization of PVC input prices that were abnormally high during COVID, and the mix shift toward higher-margin fluted panels.
• PVC price mechanics: PVC contributes 40%–45% of product cost. Prices are adjusted 2–3 times a year, so fluctuations tend to balance out over the full year, though inventory effects can temporarily compress or inflate margins in any given quarter.
• H2 margin outlook, but no firm number: Management expects "even better figures" in H2 compared to H1, but declined to give a firm full-year margin guidance, saying it will provide one after Q3 results.

Hitesh Agarwal: "Sometimes we are having inventory of lower cost and prices are increased and we do increase our sale price also. And vice versa sometimes it happens in reverse scenario also."

Capacity & Capex

• Utilization headroom exists: PVC profile capacity utilization is currently 60%–65%, up from ~55% last year, and can reach 85%–90% with any product mix. No additional capacity is needed at Jaipur or Coimbatore to meet current demand.
• Bangalore is the only expansion: The Bangalore UPVC window manufacturing unit is now fully operational, and extrusion lines for UPVC profiles and fluted panels are targeted to commence by the end of this financial year. Machine procurement and installation have already begun.
• Capex funded internally: No new loans are scheduled for the Bangalore factory; regular capex is being met from internal accruals. Existing EMI-based loans of ~₹25–₹26 crores are being repaid at ~₹6–₹7 crores per year.
• Working capital improving: The working capital cycle of 70–80 days is improving as the top line grows, and no additional working capital is being added.

Guidance & Commitments

Key Metrics