DHABRIYA POLYWOOD LTD.

About Dhabriya Polywood

Incorporated in 1992, Dhabriya Polywood manufactures and fabricates PVC profiles, uPVC windows and doors, and modular furniture. Its manufacturing facilities are in Jaipur and Bangalore, and its products are sold through a network of 800+ dealers and distributors across India. The company serves customers in real estate and interiors, with products spanning profiles, windows and doors, and furniture.

Why we recommend Dhabriya Polywood

• Products suited to project timelines: The report notes that easy-to-install products with quicker turnaround times may help developers meet RERA timelines. The company can produce multiple SKUs, including different thicknesses and colors, in small or large batches.
• Alternative materials for interiors: PVC marble sheets and laminates sold under the D-Stona brand offer a premium-looking finish at lower cost than wood or marble, according to the report.
• Established distribution and customer base: The company has 800+ dealers and distributors across India and an order book of INR 135 Cr.+ as on Sep’24 for uPVC and modular furniture, with marquee customers including M3M and DLF.
• Capacity headroom: Capacity utilization is ~50-55% for PVC profiles, ~30% for uPVC and ~70% for modular furniture. The report estimates capacity could support ~1.75x FY24 revenues without major capex.
• Custom products and retail opportunity: The company offers products in 2000 colors and a range of shapes and sizes, with product guarantees from 5 years to 10 years. The opening of Studio Arezzo is intended to increase retail sales of modular furniture.

Dhabriya Polywood Key Financials

FY24 operating revenue was INR 212 Cr. and PAT was INR 14 Cr. The projections assume EBITDA margins of 14.7% and show PAT margin rising from 7.4% in FY26(P) to 8.6% in FY29(P).

Valuation and Target Price

The report bases its valuation on 1-Yr forward FY26 PAT of ~INR 24 Cr. and a PE multiple of 24x. It assigns a target price of INR 520/-, potential upside of 32% and a Buy recommendation, while noting that projected average EPS growth of ~27% Y-o-Y for future years indicates further potential upside.

INR 393.55

CMP (27-Dec’24)

INR 520/-

Target price

32%

Potential upside

Buy

Recommendation

Key Risks

• Working capital intensity: The business has historically required substantial working capital, with NWC days above 160 in earlier periods. The cycle was 106 days in FY24 and H1-FY25.
• Raw material prices and imports: Inputs such as uPVC powder, PVC resin, additives and stabilizers are exposed to price changes. Some items, including uPVC door handles and locks and modular furniture sub-items, are imported.
• Real estate cyclicality: A downturn in new construction, repair or renovation could affect demand because real estate is the primary end-use market for the company’s products.

Business and Product Mix

The company earns revenue from PVC profiles, uPVC windows and doors, and modular furniture. Its subsidiaries include Polywood Profiles Pvt. Ltd., Dynasty Modular Furnitures Pvt. Ltd. and Polywood Green Building Systems Pvt. Ltd. The report attributes recent EBITDA margin improvement to product mix, operational efficiencies through backward integration and lower raw material prices.

The report lists INR 17.36 Cr.* of additional orders received after September from developers including Concient Group, Puravankara Group, DLF Group, M3M Group and Mahindra Group. The listed order types include modular kitchens and uPVC or aluminium windows and doors; *inclusive of GST.

Peer Comparison

The report identifies Kaka Industries Ltd. as a comparable competitor and notes that Dhabriya Polywood serves customers through 800+ dealers and distributors, compared with ~300+ for Kaka Industries.

Management

• Mr. Digvijay Dhabriya: Founder and Managing Director; the report cites over 25 years of industry experience and describes him as a first-generation entrepreneur.
• Mrs. Anita Dhabriya: Whole-time Director involved in administrative and operational affairs, with 20 years of experience in the manufacturing sector.
• Mr. Mahendra Karnawat: Whole-time Director who heads marketing activities for extruded PVC profile and has overall experience of 25 years.

Our View

The Buy view rests on the company’s product range, distribution network, marquee customer base and estimated capacity headroom. Working capital needs, raw material price volatility and exposure to real estate demand remain key risks. The report assigns a target price of INR 520/-, indicating potential upside of 32%.

Standard disclosures

• Research Analyst has served as an officer, director or employee of subject company(ies): No
• We or our associates have received compensation from the subject company(ies) in the past 12 months: No
• We or our associates have managed or co-managed public offering of securities for the subject company(ies) in the past12 months: No
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• We or our associates may have received compensation or other benefits from the subject company(ies) or third party in connection with the research report –No
• We or our associates or Research Analyst or his/her relative's financial interest in the subject company(ies)- No
• Nature of financial interest in subject company, if any –Nil
• We, our associates or Research Analyst have actual/beneficial ownership of 1% or more securities of the subject company (ies) at the end of the month immediately preceding the date of publication of Research Report – No
• Subject company (ies) may have been client during twelve months preceding the date of distribution of the research report-No.
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Regulatory disclosures

Minerva Capital Research Solutions is an independent investment advisory firm founded by Nishant Gupta(SEBI registration no. INH000018896).

Registration granted by SEBI and certification from NISM in no way promise or guarantee that the research recommendation will provide any assured, minimum or risk-free return to the investors.

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Rating rationale

Minerva Capital Research Solutions endeavors to provide objective opinions and recommendations. Ratings are assigned to stocks according to their fair value vs current market price and then categorizes them as Buy, Hold, Reduce, Sell. The performance horizon is one year unless specified and fair value is defined as analyst’s valuation for a stock.

• Buy:> 15%
• Hold: -5% to 15%
• Reduce: -15% to -5%
• Sell: <-15%