Kriti Industries (India) Limited (KRITI.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '26 Conference Call of Kriti Industries Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.

Good morning, everyone, and a very warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent Investor Relations of Kriti Industries Limited. On behalf of the company, I would like to thank you all for participating in today's earnings call for the first half of the financial year 2026. Before we begin, let me mention a quick cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now let me introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Shiv Singh Mehta, Chairman and Managing Director; and Mr. Rajesh Sisodia, Chief Financial Officer. Without any delay, I request Mr. Shiv Singh Mehta to start with his operational highlights for the period under review, followed by financial highlights from Mr. Rajesh Sisodia. Thank you, and over to you, sir.

Thank you. Good morning, everyone, and welcome to the earnings conference call of Kriti Industries India Limited for the second quarter and the first half of financial year 2026. Let me begin by sharing some brief highlights for the quarter. This quarter results will disappoint all of you. Our sales are down and our expenses per unit of sales have impacted profitability in spite of better per unit realization. Sales are down 34% in agri and 33% in building materials. This is a defining period in our business development plans. We are going through good and bad phase of transition. We are conscious of emerging opportunities and challenges of industry. We have taken informed calls and steps. However, we were not prepared for heavy and extended rains in our main agri sales areas, and its impact on both top line and bottom line is beyond our anticipation. I'd like to assure you that we are analyzing market and data for required steps. With market leadership and brand strength we have, we have every reason to have a self-belief to improve going forward. I'll now hand over the call to our CFO, Mr. Rajesh Sisodia to take you through the financial highlights.

Thank you very much, sir. Good morning, everyone. Let me take you through the company's financial outcome on a consolidated basis for the period under review. The revenue for the quarter stood at approximately INR 86 crores, reflecting a 27% decrease on a Y-o-Y basis. At the EBITDA level, the company reported a loss of INR 4 crores compared to a profit of INR 5 crores in the corresponding period last year. The net loss for the quarter was around [indiscernible]. For the first half of the financial year, the revenue stood at INR 310 crores, a decline of 17% on Y-o-Y basis, while EBITDA stood at around INR 11 crores, translating into an EBITDA margin of 3.55%. At the PAT level, the company reported a loss of INR 2.4 crores. With that, I open the floor for a question-and-answer session. Thank you.

[Operator Instructions] The first question comes from the line of Sunny Gosar from MKVentures.

My first question is basically, if we look at the peers and larger volume trends in the industry, while there was demand softness, but our decline is substantially higher as compared to most other players in the industry. So have we lost market share in our core geographies? Or is it that the geographies that we are present in have seen an underlying volume decline, which is of a similar nature?

You see, this is the question which was also bothering us for a little while. And we went -- we are trying to get into details. Our first level of study clearly suggests that the areas, that is MP, Rajasthan, Maharashtra, where we are dominant presence, we have not lost market share, and market volumes have declined. However, as you have very correctly pointed out that our decline is sharper as compared to industry. It clearly indicates that geographical spread is equally essential and important because if monsoon is impacting agriculture sales in an area, specific to your area of preference, probably you will have to look beyond that. And secondly, yes, we have been maintaining -- we will have to work equally aggressive on building materials side because that is not impacted by the vagaries of monsoon or nature. So we are finding -- trying to find the right balance for working on these strategies. And already all the steps -- required steps are in position.

Got it. And like as the monsoon has abated now, so how are you seeing the demand trends? Because this is typically the peak season in terms of seasonality, so how are the demand trends emerging? And what is -- so can we say that the worst is behind, and we should see improving outlook going forward?

See, as far as the quarter 3 is concerned, as you must have noticed, even in October, the rain trends continue. But post Diwali, I think now things are where -- the monsoon is over. So everyone was anticipating that from November 6, 7, that is last 3, 4 days, the market has started showing positive signs of revival. But yes, October was again a month not very comfortable because of the extended rains during this period. It was unprecedented that from May till October this time, it has rained throughout.

Sure. Got it. And just one last question. So was there any inventory losses from the PVC price fluctuation in Q2?

No, no. There was no -- resin prices were more or less stable. So there are no inventory losses here on this account. Only as I had mentioned in my initial statement, we are trying to develop markets for which our per unit expenses were planned for a much higher volume, which we were not able to achieve during this period. So that has impacted our overall business performance. However, the general realization part, we have definitely improved on a per unit basis by selling the right and appropriate products in the market.

[Operator Instructions]. The next question comes from the line of [ Praneeth ], an investor.

Hello? Hello?

Yes, yes, you're audible.

Yes, sorry. So I was wondering in terms of you mentioning that the lack of geographical diversification has been hindering your overall performance. Does the company have any plans to expand beyond the 3 core markets?

See, we have already started working on the new markets, but it takes time to really achieve the numbers required. And as we have seen this time, it's unprecedented. We have never seen that the rains have been so widespread in the territories of our interest, that MP, Rajasthan and Maharashtra, which is predominantly a fairly large geography. But this time, right from May, I mean, if you will see until end October, even after Diwali, there were a few days where the rains were quite widespread.

Understood. But -- so basically, how long -- do you have a tentative timeline on when can the other geographies make a meaningful contribution to our overall revenues?

We are already working in new geographies. They take time to mature. And as such, when the good rains are, it means that water bodies are full. So going forward, for this next -- I mean, up to summer, if there is an adequate supply of water for the farmland, we hope that the demand would be fairer and better than what it has been because normally, if there is a shortage of water, it would impact the irrigation.

Understood. But overall, despite -- okay, leaving the rain aside, do you see any other factors that are impacting -- like external factors that are impacting the overall, let's say, consumption pattern in the agri sector in terms of piping?

Even all the projections and studies, they suggest that India on both agriculture irrigation as well [indiscernible] continue to grow at least for the coming foreseeable 6, 7 years.

I understand that. But I'm just curious, are there -- because as far as I'm aware, the overall patterns have been only affected because of the excessive rains that have been happening in the last few months. I'm asking if there are any other factors that are also affecting the muted performance?

So there are no other factors. Fortunately, the raw material supply plus -- is quite comfortable. Markets are definitely growing. And obviously, these two things happening on the right side. We have [indiscernible] forward, things should improve.

Understood. So -- but can you mention -- overall, let's say, you mentioned that you are -- on a broad base, you mentioned that you are a little steeper than the rest of the industry because of the concentration in the each core markets. Could you enlight us on like how much have the core markets have reduced compared to the overall industry in terms of consumption decline?

We are still studying the other areas because our presence in other areas is limited. So we don't have exact data.

No, no. I'm asking about our core markets results, Madhya Pradesh, Rajasthan. Those markets, how much has the industry declined?

Industry has declined, I mean, similar numbers or maybe more because we have certainly not only managed our market share because if suppose there is a lack of demand and there is a lack of shortage of our product, we've certainly find that, the [ view to preference ], our sales volume in terms of percentage of market share, we are on the better side of the numbers. So we feel that the markets where we are present, our market share has improved is our first assessment. However, the total demand was low. So the total sales number are down.

So what kind of market share gain do you think we have noticed in the last few quarters?

See, particularly last quarter, and we are still estimating. You see, I cannot give you exact numbers today. But general feeling is that we must have gained, say, 5% to 7% generally everywhere. That's the estimation as of now.

So let's say, in Madhya Pradesh, what kind of market share would you be having today after the consolidate -- like after we were able to expand in the last quarter?

We are at about 50% around. But this time, it will be closer to 58%, 59%. This is our first estimate.

Understood. And I noticed that your competitors, let's say, such as Jain have also been enforcing, they also want to expand the market share in these markets, such as Madhya Pradesh and all of that. How do you see their effect into, let's say, getting more dealers in your particular areas? Or how do you see their overall strategy in terms of expanding more into our -- because their core market is also similar to yours. So I was wondering how does it see?

For them, the mere core market is more towards Maharashtra. But MP, all of the major players are present. I mean, even today, for last so many years, for all these years, all the major players are well present here.

Understood. So you don't see any substantial change in the positioning of any brand?

We don't see any immediate change in any positioning of any brand. But you see market is dynamic. You have to be always alert and keep making efforts in the right way and right there.

Understood. And in terms of building products, what kind of green shoots do you see at this point of time? I understand it's taking a little time to develop the overall market, especially when it's weak. So I was wondering what kind of efforts the company has been doing in terms of developing that particular business unit?