Euro Pratik Sales Q3 FY26 earnings call

What moved the numbers, as management explained it

• North India GRAP 4 pollution-related construction restrictions halted sales, deferring roughly 8-10% of expected North India sales to Q4 FY26. (one-off)
• South India sales grew 42.2% in Q3, partly offsetting North India weakness and lifting the consolidated figure.
• Operating leverage and the fast-fashion, asset-light model lifted EBITDA margin to 43.1% in Q3 (vs ~36% prior-year quarter).
• A fire incident in Q1 FY26 dragged down 9M FY26 growth to 14.3%; management said full-year FY26 growth should be better. (one-off)
• URO Veneer World (51% acquired December 2025) begins contributing from Q4 FY26, but inter-company sales get eliminated in consolidation.

The numbers management led with

• Q4 FY26 revenue growth guidance: Minimum 25% YoY (consolidated, including URO Veneer World)
• Distribution network size: ~190 distributors (188 in India + 2 in Nepal) across 138 cities, 25 states, 6 UTs; up from 97 in FY23
• Market share in decorative wall panels: 15.87% per Technopak report
• URO Veneer World acquisition: 51% stake acquired Dec 1, 2025; 25+ year-old South India B2C retailer with 2,000+ architects/contractors

Guidance on this call

By business

Balance sheet, capex and funding

• Fixed asset-light model: products sourced from 36+ partners across India, South Korea, China, US; no major in-house manufacturing capex disclosed.; other
• URO Veneer World: 51% controlling stake acquired in 2025 for forward integration; financial terms not disclosed.; other
• Hues Ply Decor JV (Hyderabad): planned total investment upper limit of ₹8-10 cr, initial outlay about ₹2 cr from the company.; capex
• Warehouse: ~1,84,162 sq ft across Bhiwandi, Chennai, Delhi, Bangalore at ~80% utilization; more space readily available.; other

The industry, as management sees it

Management sees a structural shift toward organised players in both decorative wall panels and laminates, supported by industry CAGRs of 18% and 12% respectively (FY24-29 per Technopak). Cited macro tailwinds: rapid urbanisation, rising disposable incomes, preference for quick-installation interiors, GST rationalisation, and growing consumer preference for aesthetic and eco-friendly solutions.

Risks management named

• North India construction/GRAP-4 restrictions can disrupt Q3 sales mix
• Q1 FY26 fire incident caused revenue loss; recovery still being lapped
• Customer concentration through 185+ distributors limits end-customer visibility
• Frequent catalog refresh (~2/month) creates product obsolescence at 15-20 months

Not answered directly

• Standalone Q4 organic revenue growth number (Atul Mehra, Hrushikesh Shah)
• Specific 3-year growth number (Pratik declined to quote)
• Q4 PAT / bottom-line specific number (Pratik deferred to 'for sure' growth)

Asked for a number, answered without one

• Q4 FY26 margin number: Pratik said "I can't give a number, but hopefully we will be able to get good budgets" and pointed to the 40% ±3% historical range.
• 3-year revenue growth outlook: Pratik said "I can't quote a number as of now" but expected to do "much better than the market growth."
• Exact North India Q3 revenue loss number: Pratik gave only a range: close to 8% to 10% of expected North India sales were not achieved in Q3.

Every question, with its answer

1. 1. Q3 revenue growth dissection

   Pritesh, Lucky Investments

   Question. How should we dissect the 7% Q3 top-line growth? Were there any misses, and what incremental growth do you see for H2 and next year given the gap versus the 18-20% industry growth?

   Answer, Pratik Singhvi, Chairman & Managing Director. Cited pollution/construction restrictions in North India during Q3 (GRAP-4) as a drag on the North, partly offset by ~40% contribution from the South. URO Veneer World consolidation from December 1, 2025 will deliver a full three months in Q4. Confident of delivering both top-line and bottom-line growth in Q4 onwards.

   Follow-up. Can you break out North India versus Rest of India performance for Q3, and quantify the impact of the North India slippage?

   Answer. Alpesh Sangoi: North India construction restrictions hit expected sales; South grew very well. Pratik Singhvi: North India sales were 22.4% of Q3 mix; South India sales grew 42.2%. Had the construction ban not been in place, North would have contributed ~27-28% of overall sales. Management estimates 8-10% of the sales typically expected from North India did not come in Q3 and should shift into Q4 FY26 — described as 'a postponed sale'.

2. 2. Q4 growth trajectory & M&A outlook

   Atul Mehra, Motilal Oswal Asset Management

   Question. If the industry is growing 18-20% and Q3 saw lost sales, shouldn't Q4 grow over 30% top-line? What's the current Q4 trajectory you are seeing? Also, what's the medium-term (2-3 year) thought process on M&A?

   Answer, Pratik Singhvi, Chairman & Managing Director. Targeting minimum 25% YoY in Q4. The North India sales are now streamlined post the construction ban and should come back in Q4. On M&A: intention is forward integration and similar premium products in the interior segment; talks are on with a few companies and they hope for positive news. On 3-year outlook: 'should be better than the industry average' — no specific number quoted; 12-15% growth in 9M FY26 is partly deflated by the Q1 FY26 fire incident.

   Not answered directly.

3. 3. Margin sustainability & ban status

   Hiten Boricha, Sequent Investments

   Question. On margins, the ~600bps expansion looks strong — what are the levers and is this sustainable at the 25% Q4 growth run-rate? Also, has the North India construction ban been lifted? And is the 25% Q4 growth inclusive of the acquisition?

   Answer, Pratik Singhvi, Chairman & Managing Director. Margins: described as a function of the asset-light model and innovative products with handsome margins — 'not a one-off case, consistent for the last 5 years'. Refused to give a specific Q4 margin number but flagged 'good margins'. North India GRAP-4 ban was lifted about two weeks before the call; business is back to usual. On the 25% Q4 growth — management confirmed this is on an overall (consolidated) basis including acquisition.

4. 4. Competitive landscape

   Love Gupta, Countercyclical Investments

   Question. Who are your key competitors in the wall panel/fluted panel segment? Do you consider Dhabriya Polywood a competitor? Do you also use PVC profiles and fabricators in your distribution channel?

   Answer, Pratik Singhvi, Chairman & Managing Director. Per Technopak, Euro Pratik holds ~16% market share in wall panels; rest of the market is fragmented with hundreds of small regional players (INR50-70 cr top-line each) doing 1-3 products vs Euro Pratik's 30+ products and 3,000+ SKUs. Alpesh Sangoi added named competitors: Mystic Panels, Rung, and Treelam. On Dhabriya Polywood: management acknowledged they are in manufacturing but only overlap on one of the 30+ product categories. Distribution channel is focused on wall panels — partners stock and supply to dealers/architects/contractors; no PVC profile fabrication arrangement.

5. 5. Distribution & dual-brand strategy

   Vrudhi Vora, SAS Capital

   Question. Distributor count has grown from 97 in FY23 to ~190 by Dec 2025 — what's the FY27 target? How do you balance the channel strategy between the independent Euro Pratik and Gloirio brands? And how do you mitigate supply chain risk across 36+ contract manufacturers?

   Answer, Pratik Singhvi, Chairman & Managing Director. Target: add 12-15% more channel partners per year; strategy is moving beyond metros into B-Cities, C-Cities and rural markets where infrastructure development and purchasing power are growing. On dual brand: Gloirio and Euro Pratik operate independently with separate offices, warehouses, sales teams and distribution networks — described as competing with each other to get better product awareness. On supply chain: for most running products, Euro Pratik has 2-3 contract manufacturers each; R&D, design and development are all done in-house and contract manufacturers hold no inventory — they manufacture against firm orders.

6. 6. Margin sustainability & URO synergies

   Prateek Shah, Investing Alpha

   Question. EBITDA margin expanded from ~36.5% YoY to 43% in Q3 — is this margin profile sustainable going forward? And what synergies have been unlocked from the 51% URO Veneer World acquisition in South India?

   Answer, Pratik Singhvi, Chairman & Managing Director. On margin: company wants to 'remain in the bracket of around 40% plus minus 2%-3%' and called it consistent over the years. On URO Veneer synergies: it's a 25+ year-old South India B2C retailer with 2,000+ architects/contractors; provides Euro Pratik with direct end-customer insight and trend visibility. Euro Pratik has also helped URO source non-core products at better quality, design and price.

7. 7. Repeat customer mix, M&A pipeline, warehouse

   Rajiv Jain, Arcane Investments

   Question. What percentage of sales come from repeat customers vs new acquisition, and how is the mix evolving? Are there any acquisition opportunities being actively evaluated for FY26? With ~1,84,000 sq ft of warehouse, what's the utilisation and do you see need for further expansion?

   Answer, Pratik Singhvi, Chairman & Managing Director. Most business is B2B via ~185 distributors; Euro Pratik does not have visibility into the end-customer (goods going to Punjab etc.), so the 'repeat customer' construct doesn't apply directly — distributors, designers and architects are the recurring layer. On M&A: actively evaluating opportunities in the interior/premium segment, hope to announce something in the coming months. Warehouse utilisation ~80% currently; additional space is readily available when needed.

   Partly answered.

8. 8. Hues Ply Decor JV

   Aasim, Dam Capital

   Question. Tell us about the new Hues Ply Decor JV — what is the overall plan and how does it fit the Euro Pratik ecosystem? Is there a financial commitment?

   Answer, Pratik Singhvi, Chairman & Managing Director. Hues Ply Decor is a Hyderabad-based 20+ year-old firm with its own warehouse and 1,000+ dealers. JV plan: Euro Pratik brings sourcing and design core strength; partner brings legacy distribution. Target 300-400 SKUs over the next one year, focused on acrylics/ASA products for the South. Upper cap of INR8-10 cr placed on the JV; current estimate is ~INR2 cr (+/- 10-15%) of investment from Euro Pratik; operations targeted to start by Q1 next year.

9. 9. Quality, cannibalisation, growth mix

   Devanshi Shah, HUF Capital

   Question. With contract manufacturers across India, South Korea, China, US and Europe, how do you ensure quality consistency? With 113 catalogs in 4 years, how do you prevent product cannibalisation? Which product categories are currently driving the highest growth?

   Answer, Pratik Singhvi, Chairman & Managing Director. Quality: KMP team of ~10 people regularly visits contract manufacturers; most have been associated with the company for 5-10+ years — no major quality issues of late. Cannibalisation: addressed via the fast-fashion model — products typically go obsolete in 15-20 months; old catalogs are phased out as new ones are launched. Growth by category (Alpesh Sangoi): wall panels and laminates are growing broadly in line, with wall panels consistently contributing ~65% of revenue for the last 8-10 quarters; laminates are positioned in the premium high-end segment as a complement, not a substitute.

10. 10. Q4 growth attribution: organic vs M&A

    Hrushikesh Shah, Alchemy Capital

    Question. Is the 25% Q4 growth guidance inclusive of the URO Veneer World acquisition? If we strip URO out, base business growth looks closer to 14% — what else could be driving higher growth in Q4?

    Answer, Alpesh Sangoi, Finance Controller. 25% growth is on an overall consolidated basis; inter-company sales between Euro Pratik and URO Veneer World are eliminated on consolidation, but the value-add margin on B2C business is retained. Management argued that sales made through the URO platform for new product categories should be treated as organic — Euro Pratik is using the URO retail network to introduce new SKUs it wasn't dealing in before. Q1 FY26 fire-related loss was also flagged as a base-effect tailwind.

    Not answered directly.

11. 11. Q4 standalone growth & PAT outlook

    Atul Mehra, Motilal Oswal Asset Management

    Question. Last year's Q4 revenue was INR73 cr — assuming no M&A, what would the standalone growth be in Q4? And on the bottom line, how should we think about Q4 PAT given the inter-company dynamics?

    Answer, Pratik Singhvi, Chairman & Managing Director. On standalone: management pointed to ~INR85 cr Q4 number but reiterated that sales to URO Veneer World are eliminated on consolidation. Last year's Q4 PAT was INR14 cr and PBT INR17 cr. On the bottom line: 'for sure' growth; on top-line 'maybe a couple of percentage here and there' above the 25% floor. Did not provide a specific Q4 PAT number or a clean standalone growth number despite two rounds of probing.

    Not answered directly.

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In their words