Growth pillars in place driven by project Lakshya
Dollar Industries Ltd (DIL), reported results were lower than our estimates. Company reported sales growth of ~9.8% YoY supported by a volume growth of ~10.5% YoY and a decline in the average selling price by ~1% YoY. Company reported volume growth of ~4.7% YoY in FY25. The high margin & premium products contributed ~29% to the overall revenue of the company. Stable raw material prices helped the company to improve the gross margin by ~100 bps in FY25. Revenue from modern trade and e-commerce (contribution ~8% of of revenue in FY25) grew by ~63% YoY. Company’s premium brand Force Nxt (contribution of ~4% of revenue) reported volume growth of ~13.4% YoY & value growth of ~13.6% YoY in FY25. In FY25 thermal segment (contribution of ~6% of revenue) reported volume growth of ~21% YoY. Dollar Protect the rain guard segment (contribution ~2% of revenue) saw a significant traction with volume growth of 40% YoY & value growth of 47.4% YoY. With good consumer demand and stable raw material prices management is confident to improve overall performance of the company going forward. In FY26 company has expanded project Lakshya in three new states of Madhya Pradesh, Himachal Pradesh, Jharkhand.
Management has guided for a volume growth of ~11%-12% YoY and EBIDTA margin in the range of ~12%-13% in FY26 without factoring in any price increase. We expect company to report sales volume CAGR of ~8% over FY25-FY27e. We remain positive on the company’s mid-to long term potential.
Outlook and Valuation
DIL’s strong brand recall coupled with deeper penetration and consumers shifting towards affordable branded quality products are strong macro tailwinds for the company. Currently the innerwear industry is witnessing a structural shift from unorganised to the organised sector. We expect DIL to benefit from this trend.
We continue to value the stock at 20x FY’27e EPS of Rs 26.2, to arrive at a target price of Rs 524 and maintain our “Buy” rating on the stock.