Company Update : Rushil Decor Ltd by Prabhudas Lilladher Ltd
Exports to drive margins higher
We attended the management meet of Rushil Décor (RDL) to gain insights into its MDF, laminates, and value-added products (VAP) businesses, as well as demand-supply dynamics in the wood panel industry. The company is strategically focusing on margin expansion, capacity utilization, and exportled growth, despite near-term margin pressure from the recent fire incident. The management has guided for revenue of ~Rs10bn in FY26 with EBITDAM of ~11%, improving to 12–13% in FY27. Growth will be supported by price hikes, higher VAP share in exports, and ramp-up of the upcoming Jumbo Laminate plant, which is expected to be largely export-driven and deliver superior margins. The company continues to operate with prudent leverage (D/E at 0.44x) and moderate capex plans (~Rs200mn in FY26). Over FY21–25, RDL delivered sales/EBITDA/PAT CAGR of 27.9%/31.9%/36.7%. We don’t have a rating on the stock.
Key takeaways :
* Guidance: The company expects revenue to reach Rs10bn with a margin of 11% in FY26, improving to 12–13% in FY27. Margins this year will be lower due to the fire incident.
* Pricing & raw materials: The company took a 5% price hike effective 15th Sep’25, with potential for further increases. The effect of price hikes will be visible from Q3FY25.
* Wood accounts for ~40% of raw material cost, while resin accounts for 10–10.5%, though the mix may vary depending on the technology used.
* Resin costs have risen by ~3% QoQ and are expected to increase further, which could impact RDL’s margins. Resin is a mix of phenol, methanol, formaldehyde, etc. Timber prices are expected to remain stable through the year.
* Kraft paper prices have increased slightly (1–1.5%), while paper costs remain stable.
* Demand & supply outlook: Demand remains healthy, though supply normalization post-monsoon could ease pricing. Implementation of BIS norms will ensure that all players comply with the quality benchmarks.
* The company exports ~5,000 CBM per month Earlier, exports were largely driven by obligation requirements, which restricted margins; however, with the obligations having been met, rising share of higher margin VAP in the export mix is expected to drive further improvement in overall margins.
* MDF segment: MDF industry capacity stands at 4.5mn CBM, while domestic sales (including imports) are at 2.8–2.85mn CBM, indicating 58% underutilization due to oversupply. However, domestic MDF industry continues to grow at 14–15%, driven by rising demand from the furniture segment.
* No significant capacity addition is expected in FY26. 3–4 small players from the unorganized sector may add capacity in FY27, which is not expected to materially impact the industry supply-demand dynamics.
* Among organized players, Action Tesa is setting up a 900 CBM plant in Visakhapatnam, while Elixir in Madhya Pradesh with a capacity of~700 CBM. In addition, an unorganized player in Kerala is coming up with 450– 600 CBM capacity.
* In India’s wood panel furniture market, 70% of manufacturers use plywood, while the remaining use MDF and particle boards.
* Boards and doors have domestic market size of >Rs6,000mn). Currently, RDL has a revenue of ~Rs300mnexpected to reach Rs420mn with the installed capacity and margin of ~8%.
* Laminates segment: The segment remains stagnant, but the company expects a pickup from H2FY26.
* Exports account for 55–60% of the segment revenue. The upcoming Jumbo Laminate plant will be predominantly export-driven, deriving ~80% of its revenue from exports, and is expected to deliver margins of 14–15%, improving to 15–16% within 2 years.
* Pre-Lam contributes to 40% in volume and 50% in value terms. The company expects this share to rise to 50% in volume and 60% in value terms, which will further enhance overall realizations.
* Laminates segment operates at 85–90% utilization. The company expects to reach revenue of Rs8bn (vs. Rs2bn currently).
* The company is operating in a lower realization matrix, but expects realizations to improve going forward, driven by a higher share of VAP in exports and an increase in Pre-Lam contribution.
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