Euro Pratik Sales Q2 FY26 earnings call

What moved the numbers, as management explained it

• Uro H1 FY26 of Rs 48-49 cr revenue and Rs 6.5 cr PAT to consolidate; on annualised run-rate Rs 100 cr revenue and Rs 13 cr PAT added at consolidated level.
• Only 51% of Uro's PAT flows to Euro Pratik while 100% of revenue consolidates — this compresses pro-forma PAT margin relative to standalone Euro Pratik. (accounting)
• Uro is debt-free with H1 FY26 EBITDA margin 20.69%; acquisition funded entirely via internal accruals so no incremental interest cost at Euro Pratik level.
• Sourcing leverage via Euro Pratik's 36 contract manufacturers to expand Uro's margins; this is the stated driver for PAT rising from Rs 6.5 cr H1 to Rs 20-21 cr by FY27.
• Canfer series launched in September at Rs 120-130 per sq ft vs premium Rs 300 per sq ft; margins guided within 5-10% of premium products despite price point shift.

The numbers management led with

• Uro Veneer World acquisition consideration: Rs. 76.5 crores for 51% stake (incl. Rs. 10.2 crores capital infusion)
• Wall panel market share: ~16% in organised decorative wall panel segment
• Uro Veneer World customer ecosystem: 3,500+ interior designers, 2,800+ contractors, 150,000+ consumers, 18,000 SKUs

Guidance on this call

By business

Balance sheet, capex and funding

• Acquisition outlay Rs 76.5 cr, fully funded through internal accruals — no new debt raised.
• Capital infusion component of Rs 10.2 cr within the Rs 76.5 cr deal value.
• Uro Veneer World is a debt-free company at acquisition; no acquired debt.
• Annualised PAT addition of Rs 13 cr at consolidated level, with Euro Pratik's 51% share being approximately Rs 6.6 cr.

The industry, as management sees it

Management sees the decorative wall panels segment growing at 18% CAGR (FY25-FY29) and decorative premium laminates at 9% CAGR, driven by rising disposable incomes, rapid urbanisation, and growing consumer preference for premium and design-led interior solutions. Residential and commercial space expansion seen as key tailwind.

Risks management named

• Consolidated PAT margins will likely decline because 100% revenue consolidation but only 51% PAT accrual
• Payback period of 6-7 years on conservative case relies on synergy realisation
• South distributor overlap (26% of 180 distributors from South) requires careful city-level management

Not answered directly

• Consolidated FY27 margins (deferred as 'too early to say')
• Specific franchise/store expansion targets (deferred)
• Future acquisition timing and targets (open but no specifics)

Asked for a number, answered without one

• Uro PAT margin expansion from 13% to 17-18%: Organically Uro will expand margins and via Euro Pratik sourcing of other products at cheaper prices; PAT guidance of around Rs 21 crores for FY27 cited as achievable.
• Base business growth rate excluding acquisition: I don't have the mumber, but we will plan to grow more than the market size expansion in the decorative wall panel.
• Consolidated FY27 PAT margins: It is too carly to say. On a consolidated basis, maybe the PAT margins might drop a little bit. But on an overall basis, we will try to maintain the return on capital employed.
• Franchise-led expansion targets in Tier I/II cities over 2 years: It is too carly to give any guidance or store expansions. Having said that, we are open for any opportunitics.
• EBITDA contribution from acquisition to Euro Pratik: On a consolidated basis and H1 numbers, the Rs. 100 crores top line would be added... annualized Rs 13 crores PAT added on a consolidated basis. Of course, our share in this profitability would be 51%.

Every question, with its answer

1. 1. Acquisition rationale, margins, distributor conflict

   Hrushikesh Shah, Alchemy Capital

   Question. Congratulations on the acquisition. With Uro's revenue at Rs. 115 crores and PAT at Rs. 20 crores, current PAT margins of ~13% would need to expand to 17-18% — how will that happen? Also, 26% of your 180 distributors are from South — won't they now see you as a competitor given you'll only sell Euro Pratik products in your showrooms? Lastly, will you expand beyond Bangalore to other cities or is this a single-region play?

   Answer, Pratik Singhvi, Chairman & Managing Director. On margins: H1 FY26 Uro achieved turnover of Rs. 48.98 crores and PAT of close to Rs. 6.5 crores. Post-integration, Uro will expand margins organically, and Euro Pratik's procurement power will help source other products Uro sells at a much cheaper price — supporting the Rs. 21 crores PAT guidance for FY27. On distributor conflict: in Bangalore, Euro Pratik is only and only promoted by Uro Veneer World, so no other distributor will be affected; other South distributors are in different cities, not Bangalore. On expansion: open for further opportunities pan-India and globally if they fit parameters.

   Follow-up. So, immediately, what would be our aim be after the acquisition? Will it be more on integration side?

   Answer. Integration will be done within the next one month. Then we will look for other opportunities and grow the business organically. Distribution network targeted to grow 10-12% annually. In September we launched the Canfer series at Rs. 120-130/sq ft targeting B&C centres, while premium products are around Rs. 300/sq ft — also looking at new channel partners for deeper penetration into rural markets.

2. 2. Operational synergies, supply chain, ERP

   Siddhesh, Ambit Asset Management

   Question. What operational efficiencies do we expect in logistics, warehousing and supply chain post-acquisition? Will integration help reduce delivery times to dealers and designers? Are there plans to unify backend systems like ERP across both companies?

   Answer, Pratik Singhvi, Chairman & Managing Director. Procurement will improve because Euro Pratik works with 36 contract manufacturers and can source Uro better designs at economical prices. Uro has a 30,000 sq ft warehouse with ample stock and ~200+ daily showroom customers, supporting retail scaling in Bangalore. On ERP: Uro currently uses Six Orbit ERP software, which is inbuilt and we have evaluated it — it's working well for this size. We would plan unification in the future.

   Follow-up. And how does this acquisition expand reach into South India, Tier I, Tier II markets? Should we expect more acquisitions?

   Answer. This is B2B to B2C transition. Uro has dealt with 3,500+ designers, 2,800+ contractors, and 18,000 SKUs. Euro Pratik will reach consumers directly and understand the market better. We are exploring more opportunities — if it fits our criteria, we will look at it in future.

3. 3. Strategic gap and revenue synergies

   Virat Shah, VS Investments

   Question. What strategic gap does this acquisition fill for Euro Pratik and how does forward integration strengthen control over the value chain? Do we see revenue synergies from combining Euro Pratik products with Uro's designers/contractors network?

   Answer, Alpesh Sangoi, Finance Controller. From B2B brand, we are moving to B2C, directly engaging designers, architects and eliminating middlemen. Euro Pratik will gain end-customer data, market know-how, first-hand visibility into design trends, and ability to replace competitor SKUs. Sourcing from 36 contract manufacturers will source better products at better prices for margin expansion. On synergies: H1 Uro achieved Rs. 48-49 crores turnover; once consolidated it will contribute 30-32% to total consolidated basis, providing additional growth. Sourcing power will expand Uro's margins and grow bottom line.

4. 4. Franchise expansion, cost synergies

   Pratik Patel, Investing Alpha

   Question. Regarding franchise-led expansion to Tier I and Tier II cities, do you have specific targets for the next 2 years? What are the key cost synergies expected?

   Answer, Pratik Singhvi, Chairman & Managing Director. On franchise expansion: too early to give any guidance on store expansions. We are open for any opportunities that fit our guidelines and will be happy to explore. On cost synergies: Euro Pratik's sourcing expertise and bulk buying power will help Uro Veneer World expand margins through lower procurement costs. This will help both Uro Veneer World and Euro Pratik on a consolidation basis.

   Not answered directly.

5. 5. Payback period, growth strategy

   Richa Shah, SRP Associates

   Question. What is the payback period for this acquisition? What is your growth strategy considering 3 to 5 years of time?

   Answer, Alpesh Sangoi, Finance Controller. Investment of Rs. 76.50 crores against annualised PAT of Rs. 13 crores gives 6-7 years conservative payback period. However, internal growth drivers (margin expansion, reduced procurement cost) will bring payback much lower. Growth strategy: organic plus inorganic. Canfer series targets middle-class India in B&C cities. Innovation is our DNA — bottom line driven growth for shareholders.

6. 6. Consolidated margins, ROCE, growth vs industry

   Hrushikesh Shah, Alchemy Capital

   Question. Uro's gross margin of 31% and EBITDA of 21-22% — is that correct? On consolidated basis going forward, margins might come down a bit because of this. What would be our consolidated margins in FY27? Based on DRHP, industry will grow 18% — how fast do we grow vs industry historically?

   Answer, Pratik Singhvi, Chairman & Managing Director. Confirmed: Uro's H1 gross margin 31% and EBITDA 20.69%; debt-free company, so EBITDA to PAT conversion is clean with only tax as major expense. On consolidation: PAT margin will definitely go down because we own only 51% — full revenue consolidation, 51% PAT share. On FY27 consolidated margins: too early to say. Focus is on ROCE, retail benefits, and consumer direct connect. We are hopeful of expanding Uro's margins post-integration. Historically bottom-line driven; going forward, hope to grow more than the industry 18% CAGR.

   Partly answered.

7. 7. Product expansion, retail footprint, EBITDA contribution, geographies

   Akshay Deshpande, Verdida Capital

   Question. Any plans to introduce new premium or architectural surface categories via Uro? Plans to expand retail footprint beyond South? How much will this acquisition add to EBITDA and revenue? What geographies are you planning to focus on globally?

   Answer, Pratik Singhvi, Chairman & Managing Director. On new categories: continuous process — launched 113 catalogues in 4 years, ~1000+ new designs annually, will continue. On retail footprint: not South-India focused company, 116 cities and 180 distributors pan-India. Looking for opportunities across length and breadth of country. On contribution: Rs. 100 crores top line and Rs. 13 crores PAT (annualised) added to consolidated balance sheet, with 51% share in profitability. On geographies: India first, but we have subsidiaries in US, Dubai and EU; ~3% of business from international markets. Exported to 10+ countries in 3 years. Model will remain asset-light globally.

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