Profitability in focus; growth recovery awaited
Dollar Industries Ltd (DIL), reported revenue in Q3FY26 was in-line with our estimates with revenue growth of ~2% YoY as weak demand, elevated competitive intensity, and persistent pricing pressure continued to weigh on the innerwear industry; however, the company successfully protected profitability through a margin-first strategy anchored with cost discipline and an improved product mix. Volume growth remained modest in the quarter at ~2.5% YoY but healthy on a 9mFY26 basis at ~8.5% YoY, supported by traction in premium products, thermal wear, and faster-growing channels such as modern trade, e-commerce, and quick commerce, while exports also delivered steady growth off a low base.
Management reiterated FY26 guidance of ~11%–12% YoY revenue growth and EBITDA margins in the range of ~11.5%–12%, banking on seasonally stronger Q4 demand and continued cost efficiencies, even as industry growth remains muted at ~7%–8% amid ongoing competitive pressure and limited pricing power. Corporate restructuring initiatives, including consolidation of group entities and brand ownership within the parent, are expected to yield incremental cost savings and improve earnings quality, while strong focus on cash flow generation and limited near-term capex should support balance-sheet discipline. We expect company to report sales volume CAGR of ~7% over FY25-FY28e. We remain positive on the company’s mid-to long term potential.
Q3FY26 Earnings Highlights
▪ In Q3FY26 company reported sales increased by ~2% YoY supported by a volume growth of ~2.5% YoY. Average selling price was flat YoY.
▪ Gross margin in Q3FY26 increased by ~91 bps YoY at ~36.5%.
▪ EBITDA margin in Q3FY26 declined by ~93 bps YoY at ~10.0% mainly led by a higher advertisement spends.
▪ PAT for Q3FY26 declined by ~8% YoY to ~ Rs 184 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 ~318 distributors till the end of 9mFY26 under the project Lakshya.
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 FY28e EPS of Rs 23.5, to arrive at a target price of Rs 470 and maintain our “Buy” rating on the stock.
Dollar Industries Ltd – Q3FY26 Result Update – SMIFS Institutional Research
