Dollar Industries’ share has target price of ₹₹524 (43% upside) says SMIFS

[Ravi]

Healthy demand and stable raw material prices to drive growth

Dollar Industries Ltd (DIL), reported revenue & EBITDA were broadly in-line while PAT was slightly higher than our estimates. Company reported sales growth of ~19.6% YoY supported by a volume growth of ~18.7% YoY and an improvement in the average selling price by ~1% YoY. Stable raw material prices largely helped the company to maintain the gross margin levels as compared to last year. Revenue from modern trade and e-commerce (contribution ~12% of revenue in Q1FY26) grew by ~65% YoY. Company’s premium brand Force Nxt (contribution of ~4% of revenue) reported volume growth of ~18% YoY & value growth of ~21.5% YoY. Dollar Protect the rain guard segment (contribution ~4% of revenue) saw a significant traction. 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 retained its earlier guidance for a volume growth of ~11%-12% YoY and EBITDA 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.

Q1FY26 Earnings Highlights

 In Q1FY26 company reported sales increased by ~19.6% YoY supported by a volumes growth of ~18.7% YoY. Average selling price increased by ~1% YoY.  Gross margin in Q1FY26 were flat YoY at ~35.4%.

 EBITDA margin in Q1FY26 were also flat YoY at ~10.7% mainly led by a stable gross margins.

 PAT for Q1FY26 increased by ~39% to ~ Rs 213 mn.

Project Lakshya on track

DIL is working with Vector Consultants to implement Theory of constraints (TOC), in an attempt to keep a tab on its working capital mainly by reducing receivables and inventories. Company has enrolled ~317 distributors till the end of Q1FY26 under the project Lakshya. In Q1FY26 contribution of sales from distributors under project Lakshya increased to ~32.2% of domestic sales as compared to ~31.1% YoY. Currently company has ~75,000 active retailers working under Lakshya project.

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.