Q1 2027 Somany Ceramics Ltd Earnings Call

August 12, 2026

Speaker #1: Good afternoon, ladies and gentlemen. Welcome to Somani Ceramics Limited Q1, FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator 2: Good afternoon, ladies and gentlemen. Welcome to Somany Ceramics Limited Q1 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Agarwal, Head, Institutional Equities at SKP Securities Limited. Thank you, and over to you, sir.

Operator: Good afternoon, ladies and gentlemen. Welcome to Somany Ceramics Limited Q1 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Agarwal, Head, Institutional Equities at SKP Securities Limited. Thank you, and over to you, sir.

Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing star, then zero, on your touchtone phone. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Mr. Navin Agarwal, Head Institutional Equities at SKP Securities Limited. Thank you, and over to you, sir.

Speaker #2: Good afternoon, ladies and gentlemen. It's my pleasure to welcome you on behalf of Somani Ceramics and SKP Securities to this financial results conference call.

Navin Agarwal: Good afternoon, ladies and gentlemen. It is my pleasure to welcome you on behalf of Somany Ceramics and SKP Securities to this financial results conference call. We have with us Mr. Abhishek Somany, MD and CEO, Mr. Shrivatsa Somany, Head Bathware, Mr. Ameya Somany, DGM, and Mr. Sailesh Raj Kedawat, CFO. We will have the opening remarks from Mr. Somany, followed by a Q&A session. Thank you, and over to you, Mr. Somany.

Speaker #2: We have with us Mr. Abhishek Somani, MD and CEO; Mr. Srivatsha Somani, Head Bathware; Mr. Amaya Somani, DGM; and Mr. Saleshar Kidawat, CFO. We'll have the opening remarks from Mr. Somani, followed by a Q&A session.

Speaker #2: Thank you, and over to you, Mr. Somani.

Speaker #3: Yeah, good afternoon, ladies and gentlemen. welcome to the earnings call of, FY26-27 Q1. as you can see, our sales have grown, moderately by about 3%, whereas the value has grown by 24%.

Abhishek Somany: Good afternoon, ladies and gentlemen. Welcome to the earnings call of FY26, 27 Q1. As you can see, our sales have grown moderately by about 3%, whereas the value has grown by 24%. The sales growing only at 3% is due to April, we did not get a certain segment which we were generally buying from Morbi. As you all know, Morbi was shut for the entire month and a half. So we missed a couple of percent of sales, but it will be made up this quarter very sensibly. As a result of capacity utilization, our EBITDA margins have gone up on operational efficiencies, both on capacity utilization in our plants and also on the JV performances. So EBITDA margins go up by 3.6% to 11.6% for the quarter. Capacity utilization in the JVs and very significantly in our own plants have gone up.

Speaker #3: The sales growing only at 3% is due to April. We did not get certain segments which we were generally buying from Murthy. As you all know, Murthy was shut for the entire month and a half.

Speaker #3: So we missed a couple of percent of sales, but, it would be made up, this quarter when thankfully. as a result of capacity utilization, our EBITDA margins have gone up on operational efficiencies, both on capacity utilization in our plants and also on the JV performances.

Speaker #3: So EBITDA margins go up by 3.6% to 11.6%, for the quarter. capacity utilization in the JVs and very, very significantly in our own plants has gone up.

Speaker #3: the gas price has been extremely volatile, we I had mentioned that in the earnings call for the FY26, but the gas price since then has been extremely volatile.

Abhishek Somany: The gas price has been extremely volatile. I had mentioned that in the earnings call for FY26, but the gas price since then has been extremely volatile. Every month there has been a small increase in gas price. Fortunately, we have been able to pass on all the gas price increases until now. The current price increase has been between 16% and 18%. Other than that, the demand of May and June has been pretty decent. July also has been not bad, considering that there has been rains in many parts of the country. Morbi operations have completely started. They have resumed 100% production on very expensive gas, which is being supplied by Gujarat Energy Limited, formerly known as GSPC Distribution Networks Limited. The price is significantly higher, and they have also priced it in as far as their pricing is concerned.

Abhishek Somany: The gas price has been extremely volatile. I had mentioned that in the earnings call for FY26, but the gas price since then has been extremely volatile. Every month there has been a small increase in gas price. Fortunately, we have been able to pass on all the gas price increases until now. The current price increase has been between 16% and 18%. Other than that, the demand of May and June has been pretty decent. July also has been not bad, considering that there has been rains in many parts of the country. Morbi operations have completely started. They have resumed 100% production on very expensive gas, which is being supplied by GEL, formerly known as GSPC. The price is significantly higher, and they have also priced it in as far as their pricing is concerned.

Speaker #3: Every month, there have been small increases in gas prices. Fortunately, we've been able to pass on all the gas price increases until now. So, the current price increase has been between 16% and 18%.

Speaker #3: Other than that, the demand in May and June has been pretty decent. July also has not been bad, considering that there have been rains in many parts of the country.

Speaker #3: Murthy operations have completely started, they have, resumed 100% production on very expensive gas which is on which is being supplied by GEL. formerly known as GSPCL.

Speaker #3: the, the price has significantly higher and they have also priced it in as far as their pricing is concerned. the only negative in the quarter has been from a Murthy perspective, is, exports have been down, due to geopolitical reasons.

Abhishek Somany: The only negative in the quarter has been from a Morbi perspective is exports have been down due to geopolitical reasons. The export is down a good 50%, 60% from the peak. That has been a little bit of a downer for the quarter, and this would continue probably for this quarter until the freight starts settling. We have been heavily growing in our sanitary ware, bath fitting, and the building materials division also. Again, there has been a large expansion which has taken place in the construction chemical space. We have added capacity in the South, and also we have added a very large capacity in the North, which has gone onstream only last month. The effects of that will be seen partly in this quarter and mostly next quarter. Advertising spends are in line. Receivables are in line. We have only bettered our receivables.

Speaker #3: The export is down, a good 50, 60%, from the peak. that's been a little bit of a, a downer. for the quarter, and this would continue probably for this quarter until it, starts settling, until the freight starts settling.

Speaker #3: We have been healthily growing in our sanitaryware, bath fittings, and building materials divisions also. Again, there's been a large expansion which has taken place in the building materials—sorry, in the construction chemicals space.

Speaker #3: We have, added capacity in, south and also we've added a very large capacity in the north which has gone on stream only last month.

Speaker #3: So effects of that will be seen partly in this quarter and mostly next quarter. Advertising spends are in line. receivables are in line. we've only bettered our receivables, stocks, we've been able to, reduce our stock, fairly significantly.

Abhishek Somany: Stocks, we have been able to reduce our stock fairly significantly due to Morbi not being running. That has been a big booster for clearing out old stock and also reducing a large amount of inventory which we were carrying from the past. Our debtor days, inventory days, creditor days are all healthy. Working capital days also have come down from 17 to 12 days. Overall, we are extremely bullish of the future outlook. Because of that, we have announced setting up a 9 plus million square meter plant in the South, which will be up and ready in the next 12 to 15 months. This would give us a potential revenue of about INR 350 crore.

Abhishek Somany: Stocks, we have been able to reduce our stock fairly significantly due to Morbi not being running. That has been a big booster for clearing out old stock and also reducing a large amount of inventory which we were carrying from the past. Our debtor days, inventory days, creditor days are all healthy. Working capital days also have come down from 17 to 12 days. Overall, we are extremely bullish of the future outlook. Because of that, we have announced setting up a nine plus million square meter plant in the South, which will be up and ready in the next 12 to 15 months. This would give us a potential revenue of about INR 350 crore.

Speaker #3: due to Murthy not being, running. That's been a big, big booster for clearing out, old stock and also, reducing, large amount of inventory which we were carrying from the past.

Speaker #3: our debtor days, inventory days, creditor days are all healthy. working capital days also, have, come down from, 17 to, 12 days. overall, we are extremely bullish, of, the, future outlook.

Speaker #3: because of that, we have announced, setting up a 9 million square meter plant 9 plus million square meter plant in the south which would be up and ready, by in the next, 12 to 15 months.

Speaker #3: That would give us a potential revenue of about ₹350 crore. Other than that, we are taking many more steps, which are all work in progress, to augment further capacity by about 4 to 5 million in our existing lines—in Bhadurgarh, which is in Haryana, and in Gujarat, and in Morbi, and also in the south.

Abhishek Somany: Other than that, we are taking many more steps which are all work in progress to augment further capacity by about 4 to 5 million in our existing lines in Bahadurgarh, which is in Haryana, and in Gujarat, and in Morbi, and also in the South. All put together, we will be adding another 4 to 5 million. This will be ready from mid Q3 and would be completely in place in Q4. This would add not only capacity but also will add value-added mix. I have been maintaining that our JVs were not performing to our expectation last year. This year, they have all started performing, and they will only perform better going forward. Again, one of the JVs has taken a significant value-add increase by balancing equipment. It does not come at a large cost, but that will further value-add our product.

Speaker #3: All put together, we will be adding another 4 to 5 million, for the, mid this will be ready from mid-quarter 3 and would be completely in place in quarter 4.

Speaker #3: this would add not only capacity but also will ca add, value-added mix. I have been maintaining that our JVs, were not performing, to our expectation last year.

Speaker #3: This year, they have all started performing. And, they will only, perform better going forward. again, one of the JVs we've taken up, fairly significant, capacity increase no, I'm sorry, not capacity increase, the, we've taken a significant value-add increase by balancing equipment.

Speaker #3: It doesn't come at a large cost, but that will further add—value-add—our product. So, from a product point of view and volume point of view, we're looking good for the future.

Abhishek Somany: From a product point of view and volume point of view, we are looking good for the future and we maintain that the EBITDA margins delivered in this quarter would be maintained and we are trying to better our EBITDA margins, which we have delivered in last quarter and on this quarter. On EBITDA and on the value volume, things are looking very positive going forward. I would stop here and I would take any Q&As going forward. Thank you so much.

Speaker #3: And we maintain that the EBITDA margins delivered in this quarter would be maintained, and we are trying to better our EBITDA margins which we have delivered in last quarter and in this quarter.

Speaker #3: So, on EBITDA and on value and volume, things are looking very, very positive going forward. I would stop here and take any Q&As going forward.

Speaker #3: Thank you so much.

Speaker #1: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on the touchstone phone.

Operator 2: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star and then 1 now. Your first question comes from the line of Sneha from Nuvama. Please go ahead.

Operator: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star and then 1 now. Your first question comes from the line of Sneha from Nuvama. Please go ahead.

Speaker #1: If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use handsets while asking a question.

Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star and then one now.

Speaker #1: Your first question comes from the line of Sneha from Nuwama. Please go ahead.

[Analyst] (Nuvama): Hi, Dean. Congratulations on great set of numbers. Coming to your margin itself, which is pretty surprising. We generally see a strong quarter-on-quarter drop when it comes to Q1. This time we've seen strong improvement in margins. What's really leading to this change and how structural of a change it is in terms of these numbers remaining from Q2? That's the first one.

Speaker #2: Hi, Dean. Congratulations on a great set of numbers. coming to your margins, it serves which is pretty surprising. We generally see a strong quarter on quarter drop when it comes to Q1.

Speaker #2: This time we've seen a strong improvement in margins. What's really leading to this change? And how structural of a change it is in terms of, you know, these numbers remaining from Q2.

Speaker #2: That's the first

Speaker #2: one.

Abhishek Somany: Sneha, I think this is because of capacity utilization being much better than last quarter. If you see same time last quarter, which is Q1 last year, it was 72%. We're at 83% and that's an 11% increase. Standalone, yeah. On a standalone basis from 72% capacity utilization to 83%, which is a major increase, and that has led to margin. On the other front, I think our JVs, which gave us last year on the same quarter, which is Q1 last year, gave us a loss of INR 10 crores. This time is in a profit of INR 3 crores and this would only get better going forward. Very confident of maintaining this margin and only bettering this.

Speaker #3: Sneha, I think this is because capacity utilization was much, much better than last quarter. So, if you see, same time last quarter, which is Q1 last year, it was 72%.

Speaker #3: We're at 83%. And that's an 11% increase in, sorry, standalone,

Speaker #3: We're at 83%. And that's an 11% increase in, sorry, standalone, yeah, on a standalone basis from 72% capacity utilization to 83%. which is a major, major increase.

Speaker #3: To margin. On the other front, I think our JVs, which gave us last year—in the same quarter, which is Q1 last year—gave us a loss of ₹10 crore.

Speaker #3: This time, we are in a profit of ₹3 crores, and this will only get better going forward. So, we are very, very confident of maintaining this margin and only improving it further.

Speaker #2: Well, that's a strong comment. Secondly, with respect to, demands, while we understand, I think April was slow for us and, you know, May and June saw pickup.

[Analyst] (Nuvama): Wow, that's a strong commentary. Secondly, with respect to demands, while we understand, April was slow for us and May and June saw a pickup. How has July been for us? If at all you could quantify some numbers here. Also, we keep hearing very mixed thing about Morbi. At times it is shut, at times it is opening up. What is the situation and how are even exports doing?

Speaker #2: How is July going for us? If at all possible, could you quantify some numbers here? Also, we keep hearing very mixed things about Murthy.

Speaker #2: At times, it is shut. At times, it is opening up. What is the situation and how are even experts doing?

Speaker #3: Well, so first of all, ex April was not slow. April was slow because there was no material available in Murthy. there was only that much material available.

Abhishek Somany: First of all, April was not slow. April was slow because there was no material available in Morbi. There was only that much material available and even our plants, because there was a restriction of 60% and then 80%, so some of our lines were also shut. A lot of the material had already gotten out in March. Therefore, we were also at lower capacity utilization from that point of view, considering that we didn't have enough gas, which normalized in May. Morbi, there is no ambiguity there. It is not shut or closed. It has been open since May. Of course, they took 20 days to completely normalize because of labor unavailability. But May end onwards, they've been absolutely at 100% capacity. 15% to 17% of Morbi, which has not started, is never going to start.

Speaker #3: And even our plants about, because there was a restriction of 60% and then 80%, so some of our lines were also shut. And a lot of the material is already gotten out in March.

Speaker #3: Therefore, we were also at lower capacity utilization from that point of view. considering that we didn't have enough gas. which normalized in May. and Murthy, there is no, ambiguity there.

Speaker #3: It is not shut or closed. It has been open. Since May, of course, they took, 20 days to completely normalize because of labor unavailability.

Speaker #3: But, May end onwards, they've been absolutely 100% capacity. 15 to 17% of Murthy, which is not started, is never going to start. That never started even, in May, and that's not started even today.

Abhishek Somany: That never started even in May, and that's not started even today. The situation as far as demand is concerned of July with the rains, obviously it is a tough month, but frankly, we've been able to push our sales.

Speaker #3: The, the situation—as far as July, July with the rains—obviously, it is a tough month. But, frankly, we've been able to push our sales.

[Analyst] (Nuvama): Got that, sir. Thirdly, I just wanted to understand the gas pricing. What would be the pricing in Morbi versus your north and south plants?

Speaker #2: Well, that's fair. And thirdly, we just wanted to understand the gas pricing. What would be the pricing in Morbi versus your north versus your northern or southern plants?

Speaker #3: That's a blended price comes in at about 68 and, south, we're still buying partly in spot. So, south is south and Murthy are pretty much at the same level.

Abhishek Somany: Yes. Our blended price comes in at about 68, and south, we are still buying partly in spots. So south and Morbi are pretty much at the same level, which is close to mid-70s. In the north, it is slightly lower, which is around the INR 68, INR 69 level.

Speaker #3: Which is close to the mid-70s. And in the north, it is slightly lower, which is around the 68–69 rupee level.

[Analyst] (Nuvama): Understood, sir. That was pretty helpful. Thanks for noting all the data.

Speaker #2: Understood, sir. That is pretty helpful.

Abhishek Somany: This is for natural gas. This is the pricing for natural gas.

Speaker #3: This is for natural gas. This is the pricing for natural gas.

Speaker #2: But is that your blended fuel cost? Because you also use biofuel. We would like to get your blended fuel cost for that one.

[Analyst] (Nuvama): But is that your blended fuel cost because you also use biofuel. We would like to get your blended fuel cost for Q1.

Speaker #3: No. No. What we have reported is the blended natural gas cost.

Abhishek Somany: No. What we have reported is the blended natural gas cost.

Speaker #2: Could you help us with your blended cost for Quarter 1 versus, probably, Quarter 4 blended cost?

[Analyst] (Nuvama): Could you help us with your blended cost for Q1 versus probably your Q4 blended cost?

Speaker #3: I don't have that off the cuff, because we do use a reasonable amount of biofuel. Yeah, please.

Abhishek Somany: I don't have that off the cuff because we do use.

[Analyst] (Nuvama): We can get it offline.

Abhishek Somany: a reasonable amount of bio product. Yes, please.

Speaker #2: Sure. Thanks, sir. All the best, Dean.

[Analyst] (Nuvama): Sure. Thanks, sir. All the best to you.

Speaker #3: Thank you. Thank you.

Abhishek Somany: Thank you.

Operator 2: Thank you. The next question comes from the line of Gunit Singh with Counter Cyclical PMS. Please go ahead.

Operator: Thank you. The next question comes from the line of Gunit Singh with Counter Cyclical PMS. Please go ahead.

Speaker #1: Thank you. The next question comes from the line of Guneeth Singh with Countercyclical PMS. Please go ahead.

Speaker #3: Hi. Thank you for this opportunity. So, what kind of a price hike did we take in Q1? we took a price hike of, you can take an average of about 16, 17%.

Gunit Singh Narang: Hi. Thank you for this opportunity. Sir, what kind of a price hike did we take in Q1?

Gunit Singh: Hi. Thank you for this opportunity. Sir, what kind of a price hike did we take in Q1?

Abhishek Somany: We took a price hike of, you can take an average of about 16% to 17%.

Speaker #3: Got it. So how much of a premium do we have over, the players in Murthy in terms of, realizations? Because, beca because of the higher, raw input costs, I believe that Murthy also took price hikes.

Gunit Singh Narang: Got it. So how much of a premium do we have over the players in Morbi in terms of realizations? Because of the higher input costs, I believe that Morbi also took price hikes, and our premiums to them narrowed over the previous quarters. So how does it look like now?

Gunit Singh: Got it. So how much of a premium do we have over the players in Morbi in terms of realizations? Because of the higher input costs, I believe that Morbi also took price hikes, and our premiums to them narrowed over the previous quarters. So how does it look like now?

Speaker #3: And, our, premiums to them narrowed over the previous quarters. So how does it look like now? I don't understand. When you mean higher input costs, what do you mean by that?

Abhishek Somany: I don't understand. When you mean higher input costs, what do you mean by that?

Speaker #3: Higher gas prices? Or we don't have higher gas prices. We have gas prices are same as what the other people in the country are getting.

Gunit Singh Narang: Higher gas prices.

Gunit Singh: Higher gas prices.

Abhishek Somany: We don't have high gas prices. Our gas prices are same as what the other people in the country are getting.

Speaker #3: No. What I'm saying is Murthy guys took a price hike, right? Because of higher gas prices. Oh, that way. And our premium okay. So our price increase was about 16, 17%.

Gunit Singh Narang: No, what I'm saying is, Morbi guys took a price hike, right? Because of higher gas.

Gunit Singh: No, what I'm saying is, Morbi guys took a price hike, right? Because of higher gas.

Abhishek Somany: Oh, that way. Okay.

Gunit Singh Narang: And higher premium.

Gunit Singh: And higher premium.

Abhishek Somany: Okay. Our price increase was about 16%, 17%. Morbi was just double of that because they were selling that much cheaper than us. Obviously, when they have increased prices by more than double of what they were selling, the price gap between us and Morbi has reduced. Plus, do not forget that Morbi was buying propane and LPG earlier and not natural gas, and they were buying that in various different ways, which were not the cleanest of ways. Now that they are buying Gujarat Gas, then they have to rectify their books. That also narrows our landed pricing to the dealer versus Morbi pricing.

Speaker #3: Murthy was just double of that because they were selling that much cheaper than us. So obviously, when they have increased prices by more than double of what they were selling, the, price gap between us and Murthy has reduced.

Speaker #3: Plus, do not forget that Murthy was buying propane and LPG earlier, not natural gas. They were buying that in various different ways, which were not the cleanest of ways.

Speaker #3: So now that they're buying Gujarat Gas, they have to rectify their books. So that also narrows our blended pricing to the dealer versus Murthy pricing.

Speaker #1: Got it. So our premium has basically narrowed despite the price hike.

Gunit Singh Narang: Got it. So our premium has basically narrowed despite the price hike.

Gunit Singh: Got it. So our premium has basically narrowed despite the price hike.

Speaker #3: That's right.

Abhishek Somany: That is right.

Speaker #1: Okay. And, currently, in Q2, have we seen a fall in gas prices? Are our blended gas costs...?

Gunit Singh Narang: Okay. Currently in Q2, have we seen a fall in gas prices, our blended gas costs?

Gunit Singh: Okay. Currently in Q2, have we seen a fall in gas prices, our blended gas costs?

Speaker #3: No. The prices in June and July—in fact, July is a little higher. Marginally higher, but still a little higher than what it was in May and June.

Abhishek Somany: No. The prices of June and July, in fact, July is a little higher. Marginally higher, but a little higher than what it was in May and June. So is August. August is again slightly more marginally higher.

Speaker #3: And so is August. August is, again, a slightly more marginally higher.

Speaker #1: Got it. And how does the demand scenario look like for the rest of the year, given that the prices are also higher but still demand is holding up?

Gunit Singh Narang: Got it. How does the demand scenario look like for the rest of the year, given that the prices are also higher, but still demand is holding up? I think it was 2% higher in this quarter. So I mean

Gunit Singh: Got it. How does the demand scenario look like for the rest of the year, given that the prices are also higher, but still demand is holding up? I think it was 2% higher in this quarter. So I mean

Speaker #1: I think it was 2% higher in this quarter. So I mean, how much demand scenario and what kind of.

Abhishek Somany: Yeah, but

Gunit Singh Narang: What kind of

Gunit Singh: What kind of

Speaker #3: Yeah. Demand's looking good. let's not forget that, in the last, 30 months, prices had reduced also by 15, 16%. So that's been the price increase.

Abhishek Somany: Demand's looking good. Let's not forget that in the last 30 months, prices had reduced also by 15%, 16%. So that's been the price increase. From that point of view, because of that scenario, it's been well accepted in the market, and demand seems to be absolutely good. Of course, there are these months of the rain, which is nothing to do with demand. It's more of an issue with the weather. But other than that, the demand is perfectly fine.

Speaker #3: So from that point of view, because of that scenario, it's been well accepted in the market. And demand seems to be, absolutely, good. Of course, there are these months of the rain, which is nothing to do with demand.

Speaker #3: It's more of a issue, with the weather. But other than that, the demand is perfectly fine.

Speaker #1: Got it. So if we look at the, the current cycle or maybe the last five years, how would you compare our prices currently, I mean, are they mid-cycle or are they high?

Gunit Singh Narang: Got it. If we look at the current cycle or maybe the last five years, how would you compare our prices currently? I mean, are they mid-cycle or are they high?

Gunit Singh: Got it. If we look at the current cycle or maybe the last five years, how would you compare our prices currently? I mean, are they mid-cycle or are they high?

Speaker #3: I don't understand your question.

Abhishek Somany: I don't understand your question.

Speaker #1: So you mentioned that earlier prices were higher and then they were reduced, right? So I want to understand, with the current price hike, do we still...

Gunit Singh Narang: You mentioned that prices earlier were higher and they were reduced, right? I want to understand if today with the higher prices, with the price hike, do we still-

Gunit Singh: You mentioned that prices earlier were higher and they were reduced, right? I want to understand if today with the higher prices, with the price hike, do we still-

Abhishek Somany: We are still lower than what we were five years ago.

Speaker #3: We are still lower, we are still lower than what we were five years ago.

Speaker #1: Okay. Okay. Got it.

Gunit Singh Narang: Okay. Got it.

Gunit Singh: Okay. Got it.

Speaker #3: The cost of tile five years ago was more than what it is today, inflation-adjusted.

Abhishek Somany: The cost of tile five years ago was more than what it is today, inflation-adjusted.

Speaker #1: Got it. Sir, so, despite, I mean, giving, despite a business growing over the previous five years, our company has developed hello? Yeah. I'm, I'm saying despite our, business growing over the previous five years, our company currently is trading at a market cap of 2,100 crores.

Gunit Singh Narang: Got it. Sir, despite our business growing over the previous five years, our company currently is trading at a market cap of INR 2,100 crore and around an EV/EBITDA of 8x to 9x, which is 50% lower than our own historical PE, as well as maybe half of the valuation of our peers. Our stock price has given a negative 5% CAGR over the last five years, despite Somany building a household brand. I would just request the management to seriously consider a share buyback, because it would not only make the company's accretive.

Gunit Singh: Got it. Sir, despite our business growing over the previous five years, our company currently is trading at a market cap of INR 2,100 crore and around an EV/EBITDA of 8x to 9x, which is 50% lower than our own historical PE, as well as maybe half of the valuation of our peers. Our stock price has given a negative 5% CAGR over the last five years, despite Somany building a household brand. I would just request the management to seriously consider a share buyback, because it would not only make the company's accretive.

Speaker #1: And around an EV/EBITDA of 8 to 9, which is 50% lower than our own historical PE, as well as maybe half of the valuation of our peers.

Speaker #1: So, our stock price has delivered a negative 5% CAGR over the last five years, despite Somany building a household brand. So, I would just request the management to seriously consider a share buyback, because it would not only—.

Speaker #1: Increase equitative?

Speaker #3: Thank you. Thank you for your suggestion.

Abhishek Somany: Thank you. Thank you for your suggestion.

Speaker #1: Guneeth sir, for the further questions, if I can request you to rejoin the Q4 follow-ups, please. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, we request you to limit to two questions each and rejoin the queue for any further follow-ups.

Operator 2: Got it, sir. For the further questions, if I can request you to rejoin the queue for follow-ups, please. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, we request you to limit to two questions each and rejoin the queue for any further follow-ups. Our next question comes from the line of Keshav Lahoti with HDFC Securities. Please go ahead.

Operator: Got it, sir. For the further questions, if I can request you to rejoin the queue for follow-ups, please. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, we request you to limit to two questions each and rejoin the queue for any further follow-ups. Our next question comes from the line of Keshav Lahoti with HDFC Securities. Please go ahead.

Speaker #1: Our next question comes from the line of Keshav Lahoti with HDFC Securities. Please go ahead.

Speaker #3: Hi, thank you for the opportunity. Sir, we have seen that the demand was slightly muted in March and April because of production shutdowns and all.

Keshav Lahoti: Hi. Thank you for the opportunity. Sir, we have seen the demand was slightly muted in March and April because of production shut and all. We were expecting the painter demand to hit by last quarter. Haven't really seen there, is it?

Speaker #3: So we were expecting the paint of demand to hit by June last quarter. Having we seen where is it? Sorry? I didn't get your question.

Abhishek Somany: Sorry, I did not get your question.

Speaker #3: So, my question is, you know, sir, on the last call you said March was slow; April has been slow because of, you know, supply issues.

Keshav Lahoti: My question is, sir, in last call you said March was slow, April has been slow because of supply issue. Possibly the expectation was once the supply issue will get normalized, we will see a pent-up demand. Have we seen that or where are we on that front? Because Morbi has been shut, still volume growth is low single digits. When should we expect high single-digit volume growth?

Speaker #3: Possibly the expectation was once the supply issue will get normalized, we'll see a paint of demand. So have we seen that, or where are we on that front?

Speaker #3: Because Murthy has been shut till volume growth is low single-digit. So when should we expect, you know, higher single-digit volume growth? So we're getting higher single-digit volume growth.

Abhishek Somany: No, we are getting high single-digit volume growth. In fact, now we are getting not high single digit, but we are getting mid-single digit volume growths, and this is looking good. Beyond the point, the biggest positive is that the price has been pushed into the market and we are looking at very decent volume and value growth.

Speaker #3: In fact, now, we're getting not high single-digit, but we're getting mid-single-digit, volume growth. And, this is looking good. beyond the point, the biggest positive is that the price has been, pushed into the market and, and, we're looking at very decent, volume and value growth.

Speaker #1: Got it.

Keshav Lahoti: Got it. And sir, it is really heartening to hear you saying the margin what you have shown in last two quarters will continue. Just playing devil's advocate, what we have seen, Morbi was shut. There was a supply crunch in the market, which will get normalized now because Morbi has started operation. Export is weak. Possibly, the price cut and all those things possibly can play out in upcoming months, which can put a pressure on our margin. What are your thoughts on that?

Speaker #3: Got it. And sir, it's really hardening to hear you saying the margin, what you are showing in last two quarters will continue. But just, playing a devil's advocate, what we have seen, you know, Murthy was shut.

Speaker #3: There was a supply crunch in the market, which will get normalized now because Murthy has started operations. Export is weak. So possibly, you know, the price cut and all those things possibly can play out in upcoming months.

Speaker #3: It can, you know, put a pressure on our margin. What are your thoughts on this? So my margin's really has not gone up because of pricing.

Abhishek Somany: My margins really have not gone up because of pricing. My margins have gone up because of operation efficiency, that we are producing 100% in our own plants and also our JV losses have come down. Due to that, the margins have gone up and not so much the pricing. Pricing has only been a pass-through. I am not earning anything from the pricing. If it goes down, so be it. As long as I am producing 100% and my JVs are profitable, this margin would sustain. That is why I am so confident.

Speaker #3: My margins have gone up because of operational efficiencies—that we're producing 100% in our own plants—and also our heavy losses have come down.

Speaker #3: So due to that, the margins have gone up and not so much of pricing. Pricing has only been a pass-through. I'm not earning anything from the pricing.

Speaker #3: So if it goes down, so be it. As long as I'm producing 100% and my JVs are profitable, my, my this, this margin will sustain.

Speaker #3: So that's why I'm so confident.

Speaker #1: Got it. That is good to hear. And last question from my side. How has the Somani Max been, a bit positive this quarter?

Keshav Lahoti: Got it. That is good to hear. Last question from my side. What has been the Somany Max has been a bit positive this quarter. How has that been?

Speaker #1: How has that been?

Speaker #3: Yeah. So Somani Max last year, same quarter, we had a 7 we have a 1 point something crore rupee minus. And going forward, even this, would be controlled.

Abhishek Somany: Well, Somany Max last year, same quarter, we had a INR 7 crore minus, and this time we have INR 1 point something crore minus, and going forward, even this would be controlled. If you remember, I had said that Somany Max, we will be in a situation which will be INR 10 crore loss or less, and we are very confident of achieving only better than that.

Speaker #3: So if you remember, I had said that, Somani Max we will be, in a situation which will be 10 crore rupees, loss or less.

Speaker #3: And we are very, very confident of achieving that. Only better in that.

Speaker #1: Got it. Got it. Understood.

Keshav Lahoti: Got it. Understood. Thank you.

Speaker #3: Thank you. Thank ank you.

Abhishek Somany: Thank you.

Operator 2: Thank you. Our next question comes from Saket, an individual investor. Please go ahead.

Operator: Thank you. Our next question comes from Saket, an individual investor. Please go ahead.

Speaker #1: Our next question comes from Saqib, an individual investor. Please go ahead.

Speaker #4: Hello. Sir, my question was like, sir, as you say that you see the EBITDA money being maintained at this level, so like, sir, as, your prices are increased and the price of Murthy has increased, we're higher.

[Company Representative]: Sir, my question was, like, sir, as you say that we could see the EBITDA margin being maintained at this level. So like, sir, as your prices have increased and the price of Morbi has increased higher. So because of this difference between the two getting narrowed, that is why the margins are being maintained, or why you think that the margins will be maintained going forward?

[Individual Investor] (Private Investor): Sir, my question was, like, sir, as you say that we could see the EBITDA margin being maintained at this level. So like, sir, as your prices have increased and the price of Morbi has increased higher. So because of this difference between the two getting narrowed, that is why the margins are being maintained, or why you think that the margins will be maintained going forward?

Speaker #4: So because of this difference between the two different narrows, that is why the margins have been maintained? Or, like, why do you think that the margins will be maintained going forward?

Speaker #3: Because of operation efficiency. I just mentioned earlier. It's because of operation efficiencies.

Abhishek Somany: Because of operation efficiency, I just mentioned earlier. It is because of operation efficiencies.

Speaker #4: So sir, these are efficiency can come from once suppose the Murthy comes up suppose in future the prices of, gas goes down and the Murthy again reduces the price of the products.

[Company Representative]: So sir, because efficiency can come down once, suppose Morbi comes up, suppose in future the prices of gas goes down and Morbi again reduces the price of the products. So in that case

[Individual Investor] (Private Investor): So sir, because efficiency can come down once, suppose Morbi comes up, suppose in future the prices of gas goes down and Morbi again reduces the price of the products. So in that case

Speaker #4: So in that case, will the rate of.

Speaker #3: Of course. If gas goes down, even we will reduce the prices of the products. Obviously, like we passed it through, we will pass on the benefits also.

Abhishek Somany: If gas goes down, even we will reduce the prices of the products.

[Company Representative]: Okay.

[Individual Investor] (Private Investor): Okay.

Abhishek Somany: Obviously, like we passed it through, we will pass on the benefits also, but that does not take away my operation efficiencies of my JVs, which I have worked so hard last year to make sure that they are efficient in terms of producing material or not, and the biggest part is that our own plants are producing at the fullest.

Speaker #3: But that does not take away my operation efficiencies of my JVs, which I've worked so hard last year. To make sure that they are, efficient in terms of, producing material and on.

Speaker #3: And the biggest part is that our own plants are producing, at the fullest.

Speaker #4: So, for this year, sir, what kind of volume do you see?

[Company Representative]: So for this year, sir, what kind of volume growth you think?

[Individual Investor] (Private Investor): So for this year, sir, what kind of volume growth you think?

Abhishek Somany: Mid-single digits.

Speaker #3: Mid-single-digits.

Speaker #4: Mid-single-digits. So sir, in the last quarter, I told you that.

[Company Representative]: Mid-single digits. So sir, in the last quarter you told me-

[Individual Investor] (Private Investor): Mid-single digits. So sir, in the last quarter you told me-

Speaker #1: Sorry to interrupt. Saqib sir, may we request you to return to the Q4 further follow-ups, please, as there are several participants waiting for their turn.

Operator 2: Sorry to interrupt. Saket sir, may we request you to return to the queue for further follow-ups, please, as there are several participants waiting for their turn. Thank you.

Operator: Sorry to interrupt. Saket sir, may we request you to return to the queue for further follow-ups, please, as there are several participants waiting for their turn. Thank you.

Speaker #1: Thank you.

Speaker #3: Sure.

[Company Representative]: Sure.

[Individual Investor] (Private Investor): Sure.

Speaker #1: Participants, please limit yourselves to two questions each, and rejoin for Q4 further follow-ups. Our next question comes from Viraj Kacharia with SIMPL. Please go ahead.

Operator 2: Participants, please limit yourselves to two questions each and rejoin the queue for further follow-ups. Our next question comes from Viraj Kacharia with SiMPL. Please go ahead.

Operator: Participants, please limit yourselves to two questions each and rejoin the queue for further follow-ups. Our next question comes from Viraj Kacharia with SiMPL. Please go ahead.

Speaker #5: Yeah, hi. Thanks for the opportunity, and congratulations on good numbers in a challenging environment. Three questions: one is, see, I understand for the quarter, you had a low single-digit volume because on the supply side, you were impacted.

Viraj Kacharia: Yeah, hi. Thanks for the opportunity and congratulations on good numbers in a challenging environment. Three questions. One is, I understand for the quarter you had a low single-digit volume because supply side you were impacted because of Morbi. At the same time, you had a channel which was completely, the inventory for the channel was very lean, right? Now supply is back to normal for you. If you were to give some color in terms of the channel inventory, is it back to normal now or any color you can give? Similarly on the corporate side, project side, how is the overall trend? Any color you can give on that side?

Speaker #5: Because of Murthy, but at the same time, you had a channel which was completely, you know, the inventory for the channel, was very lean, right?

Speaker #5: Now, supply is back to normal for you. How would you—if you were to give some color in terms of the channel inventory—is it back to normal now, or, you know, any color you can give?

Speaker #5: And similarly, on the corporate side, you know, project side—you know—how is the overall trend? You know, any color you can give on that side?

Speaker #3: What is the last question?

Abhishek Somany: What is the last question?

Speaker #5: Oh, on the project side. So I think earlier coming thoughts were that project itself will also be a lever for growth in addition to retail.

Viraj Kacharia: On the project side. I think in earlier comments, thoughts were that project itself will also be a lever for growth in addition to retail.

Speaker #3: Okay, understood. So, as far as the channel inventory is concerned, they had stocked up a lot in March, considering that they knew in April there would be no production.

Abhishek Somany: Okay. Understandable. As far as the channel inventory is concerned, they had stocked up a lot in March considering that they knew that April there will be no production, but otherwise since May the channel inventory has come back to normal. In fact, the channel inventory is again fairly lean because they are quite careful because of the volatility in the gas pricing. They are presuming that the gas price will come down overnight and then there may be a price reduction. So channel people are not taking the inventory they should be taking. From that point of view, channel inventory is still not very lean like it was in April because there was no production, but they are not full to their brim. The second question on project is that, yes project is going to go up.

Speaker #3: But otherwise, since May, the channel inventory has come back to normal. In fact, the channel inventory is again fairly lean because they’re quite careful, because of the volatility in the gas pricing. They are presuming that the gas price will come down overnight and then there may be a price reduction.

Speaker #3: So channel people are not taking the inventory they should be taking. So from that point of view, channel inventory is still not very lean like it was in April because there was no production.

Speaker #3: But it's, it's, it's not, they're not full to their brim. the second question on project is that, yes, project is going to go up, our total project was about, 7, 8% in, retail and about, 10, 11% in government.

Abhishek Somany: Our total project was about 7%, 8% in retail and about 10%, 11% in government. This in totality will go up by about 3% to 4%.

Speaker #3: This, in totality, will go up by about 3 to 4%.

Speaker #5: Sir, then, if you, you know, I understand, see, if you look at Q1 also, and I've just kind of doing a relative comparison into the volume growth, see, the leader had a 6% volume growth.

Viraj Kacharia: Sir, if you understand, see if you look at Q1 also, and I am just doing a relative comparison in terms of volume growth, say the leader had a 6% volume growth. The other smaller players had a very high double-digit volume growth or high single-digit volume growth. Incrementally with supply coming normal for you and you also focusing on the project side, why the conservatism in terms of the mid-single volume growth guidance? I am just trying to understand the disconnect.

Speaker #5: The other, smaller players had very high double-digit volume growth, or high single-digit volume growth. So, incrementally, with supply coming back to normal for you, and you also focusing on the project side, why the conservatism in terms of the mid-single-digit volume growth guidance?

Speaker #5: I mean, just trying to understand the disconnect.

Speaker #3: there is no disconnect. in industry leader has an advantage where, they had higher, in-house production, there's a particular category which is polish-certified tile, which we are completely exposed to Murthy.

Abhishek Somany: There is no disconnect. Industry leader has an advantage where they had higher in-house production. There is a particular category which is Polished Vitrified Tiles which we are completely exposed to Morbi. They have a small production of their own. Therefore, we were able to push that extra 2%, 2.5% growth. Other than that, the guidance for us is mid-single digit growth is what we think would be absolutely achievable. Various people have promised including us in the past that we will have high single-digit growth, low double-digit growth but never has been delivered. So we are being very cautious in what we are saying. Something which we will deliver for sure is our EBITDA margins and also our single-digit growth.

Speaker #3: they have a small production of their own. therefore, they were able to push that, that extra to, to 2.5% growth. Other than that, the, the guidance, for us is, single-digit, mid-single-digit, growth is what we, think would be absolutely achievable.

Speaker #3: various people have promised, including us in the past, that we'll have high single-digit growth, low single low double-digit growth, but never has been, delivered.

Speaker #3: So we have been very, very, cautious in what we're saying. Something which we will deliver for sure is our EBITDA margins and also our single, digit growth.

Speaker #3: As far as the smaller players are concerned, the base is very small. And I'm pretty sure it's not sustainable. And you will see that playing out from the next quarter onwards.

Abhishek Somany: As far as the smaller players are concerned, the base is very small and I am pretty sure it is not sustainable and you will see that playing out from the next quarter onwards.

Speaker #5: Got it. And any color you can give in terms of margin profile in the, bathware and the, you know, construction equipment? Obviously, it's a very low base right now.

Viraj Kacharia: Got it. Any color you can give in terms of margin profile in the bathware and the construction equipment? Obviously, it is a very low base right now, but any color in terms of profitability?

Speaker #5: But any color in terms of profitability and, you know?

Speaker #3: It's about a percent better than our normal, tile margins. Earlier, it used to be better because tile was under, underperforming. Now the tile is also performing with the capacity utilization going up.

Abhishek Somany: It is about 1% better than our normal tile margins. Earlier, it used to be better because tile was underperforming. Now that tile is also performing with the capacity utilization going up, it is almost the same, but slightly better.

Speaker #3: It's almost the same, but slightly better.

Speaker #5: Got it. Thank you, and good luck.

Viraj Kacharia: Got it. Thank you and good luck.

Speaker #3: Thank you.

Abhishek Somany: Thank you.

Speaker #1: Thank you. The next question comes from the line of Sagar Jagtap with Marine Research. Please go ahead.

Operator 2: Thank you. The next question comes from the line of Sagar Jagtap with Mariner Capital. Please go ahead.

Operator: Thank you. The next question comes from the line of Sagar Jagtap with Mariner Capital. Please go ahead.

Sagar Jagtap: Congratulations on a clear H1 luck gain. Thank you.

Speaker #2: One question while I clear the stop-lock table. Thank you.

Speaker #3: I'm sorry. I can't hear you. Hello?

Abhishek Somany: I am sorry, I cannot hear you. Hello?

Speaker #1: Sagar sir?

Operator 2: Sagar Jagtap.

Operator: Sagar Jagtap.

Sagar Jagtap: All clear. Best of luck to you.

Speaker #2: One question while I clear the stop-lock table. Thank you.

Operator 2: Thank you.

Operator: Thank you.

Sagar Jagtap: Thank you.

Speaker #3: Thank you.

Speaker #1: The next question comes from the line of Nilesh Sharma with MonoMare Capital. Please go ahead.

Operator 2: The next question comes from the line of Nilesh Sharma with Monomer Capital. Please go ahead.

Operator: The next question comes from the line of Nilesh Sharma with Monomer Capital. Please go ahead.

Speaker #4: Sir, congratulations for the good set of numbers. Sir, I just missed your, initial commentary. What will be the total capacity at the end of this year?

Nilesh Sharma: Sir, congratulations for a good set of numbers. Sir, I just missed your initial commentary. What will be the total capacity at the end of this year?

Speaker #3: At the end of this year, you mean '26, '27?

Abhishek Somany: At the end of this year, you mean 2026, 2027?

Speaker #4: Yeah, yeah.

Sagar Jagtap: Yeah.

Nilesh Sharma: Yeah.

Speaker #3: A 26, 27, there is no increase in capacity. Whatever increase we're increasing, the, 3, 4 million square meters, which is due to, some balancing equipments to increase productivity within our own, concern.

Abhishek Somany: At 2026, 2027, there is no increase in capacity. Whatever we are increasing, the 3, 4 million square meters, which is due to some balancing equipment to increase productivity within our own concerns. So there is no new line which we are putting in.

Speaker #3: So there's no new line which we are putting in.

Speaker #4: Okay. Sir, any major CapEx plan?

Sagar Jagtap: Okay. Sir, any major CapEx plan?

Nilesh Sharma: Okay. Sir, any major CapEx plan?

Speaker #3: Yes. The major CapEx plan is the 9-plus million square meter plant in the South, which is approximately a ₹220 crore outlay. This is planned for next year.

Abhishek Somany: Yes, the major CapEx plan is the 9-plus million square meter plant in the South, which is approximately INR 220 crore outlay, which is for next year.

Speaker #4: And when next year? So next year will be operational at the end of next year, like 28th. Operation?

Sagar Jagtap: Next year. So next year will be operational at the end of next year, like 2028.

Nilesh Sharma: Next year. So next year will be operational at the end of next year, like 2028.

Speaker #3: Yeah. Yeah. Yeah. End of the quarter three, beginning quarter four of next year it will be operational.

Abhishek Somany: Yeah.

Sagar Jagtap: Okay.

Nilesh Sharma: Okay.

Abhishek Somany: Yeah. End of Q3, beginning Q4 of next year it will be operational.

Speaker #4: Okay. Nine million, and CapEx is ₹220 crore.

Sagar Jagtap: Okay. 9 million and CapEx is INR 220 crore.

Nilesh Sharma: Okay. 9 million and CapEx is INR 220 crore.

Speaker #3: More or less, yeah.

Abhishek Somany: More or less, yeah.

Sagar Jagtap: And most of that will be funded by internal accruals, if I'm not wrong. Yes?

Nilesh Sharma: And most of that will be funded by internal accruals, if I'm not wrong. Yes?

Speaker #4: And most of that will be funded by internal approvals, if I'm not wrong? Yes?

Speaker #3: About 60% with, internal approval.

Abhishek Somany: About 60% with internal accruals.

Speaker #4: Okay. Perfect, sir. Thank you. Thank you, sir. Thank you.

Sagar Jagtap: Okay, perfect, sir. Thank you, sir.

Nilesh Sharma: Okay, perfect, sir. Thank you, sir.

Operator 2: Thank you. The next question comes from the line of Kalpesh with Valiantz Advisors. Please go ahead.

Operator: Thank you. The next question comes from the line of Kalpesh with Valiantz Advisors. Please go ahead.

Speaker #1: Thank you. The next question comes from the line of Kalpesh with Valentis Advisors. Please go ahead.

Speaker #4: Yes, hi. Congratulations on the great set of numbers, sir. My question is related to Murthy. So, Murthy's export is down. Is there any chance that they can dump domestically, or is the product category different?

Kalpesh: Hi. Congratulations for a great set of numbers, sir. My question is related to Morbi. Morbi's export is down. Is there any chance that they can dump domestically or the product category is different, so they cannot dump here?

Kalpesh Gothi: Hi. Congratulations for a great set of numbers, sir. My question is related to Morbi. Morbi's export is down. Is there any chance that they can dump domestically or the product category is different, so they cannot dump here?

Speaker #4: So they can't dump here?

Speaker #3: No, Murthy's export is down. There's an independent situation over there. So, the bright side of that is there will be pent-up demand when the export opens.

Abhishek Somany: No, Morbi's export is down as an independent situation over there. The bright side of that is there will be a pent-up demand when the export opens.

Speaker #4: Okay. But they can't, you know, put pressure over here in the domestic market because they are not able to sell in export.

Kalpesh: Okay. But they cannot put the pressure over here in the domestic market because they are not able to sell in export.

Kalpesh Gothi: Okay. But they cannot put the pressure over here in the domestic market because they are not able to sell in export.

Speaker #3: So unfortunately, at these kind of gas prices, there's not much they can do.

Abhishek Somany: Unfortunately, at these kind of gas prices, there is not much they can do.

Speaker #4: Understood. Understood. And, you know, you've been consistently showing an 11-plus percent margin, back-to-back. So, you know, is it sustainable, or can you, you know, up the guidance to, like, 12%?

Kalpesh: Understood. You have been consistently showing 11-plus gross margin back to back. Is it sustainable, or can you up the guidance to 12%?

Kalpesh Gothi: Understood. You have been consistently showing 11-plus gross margin back to back. Is it sustainable, or can you up the guidance to 12%?

Speaker #3: Yes, absolutely. That's the target that we achieve—12% and more. But currently, we are very confident of showing the 11-plus percent margins, which we showed last quarter and this quarter.

Abhishek Somany: Yes, absolutely. That is the target that we achieve, 12% and more. But currently, we are very confident of showing the 11-plus percent margins, which we showed last quarter and this quarter. That is something which we are very confident, and we do believe that we are doing everything possible to go beyond 12%.

Speaker #3: So, that is something about which we were confident. And we do believe that we are doing everything possible to go beyond 12%.

Kalpesh: Very clear. All the best.

Kalpesh Gothi: Very clear. All the best.

Speaker #4: Okay. Great. All the best.

Speaker #1: Thank you. The next question comes from the line of Shruti Mulchandani with Ikigai Asset Management. Please go ahead.

Operator 2: Thank you. The next question comes from the line of Shruti Mulchandani with Ikigai Asset Management. Please go ahead.

Operator: Thank you. The next question comes from the line of Shruti Mulchandani with Ikigai Asset Management. Please go ahead.

Speaker #2: Hi, sir. I hope I'm audible.

Shruti Mulchandani: Hi, sir. I hope I'm audible.

Speaker #1: Yes, I'm audible.

Operator 2: Yes, you're audible.

Operator: Yes, you're audible.

Speaker #2: Yes, thank you, sir. And congratulations on a great set of numbers. Sir, the first question I have is that, you know, I understand that the industry currently, in Q1 especially, faced more supply constraints than demand problems—the demand was there.

Shruti Mulchandani: Thank you, sir, and congratulations on a great set of numbers. The first question I have is that, I understand that the industry currently, in Q1 especially, faced more supply constraints than demand problems. The demand was there. Having said that, the outsourcing partners we had in Morbi, they were not able to supply to us. That's the reason why despite growing the capacity or the volume in our own facilities at a very impressive rate, because of degrowth in the outsourcing part, the overall volume growth came to be around 2% to 3%. I just wanted to understand from Q2 onwards, will we see the support coming from the outsourcing here as well, because Morbi has started to kind of start their production again.

Speaker #2: And having said that, the outsourcing partners we had in Morbi were not able to supply to us. And, you know, that's the reason why, despite growing the capacity or the volume in our own facilities at a very impressive rate, because of the degrowth in the outsourcing part, the overall volume growth came to be around 2 to 3%.

Speaker #2: So I just wanted to understand from Q2 onwards, will we see the support coming from the outsourcing players as well, you know, because Murthy has started to kind of, start the production again.

Speaker #2: And with that, our capacity utilization will remain at the same level or do we see that, you know, the outsourcing, supply coming in, that will be impacted?

Shruti Mulchandani: And with that, our capacity utilization will remain at the same level or do we see that with the outsourcing supply coming in, that will be impacted?

Speaker #3: No, our capacity utilization will be high, and, and I think we're not getting enough material enough to, today. But that's nothing to do with the supply side of Murthy.

Abhishek Somany: No, our capacity utilization will be high. I think we are not getting enough material today, but that is nothing to do with the supply side of Morbi. Geographically, we have plants in the south, north, and west, so there is only so much we can buy from the west. Therefore, in the north and in the south, we have more demand than what we can procure. Procuring from Morbi beyond the point becomes counterproductive because of freight. From that point of view, we are looking very good as far as demand is concerned. Therefore, we are extremely confident of keeping our own production at 100% capacity utilization, which is a major kicker to the EBITDA. Therefore, we are extremely confident of the EBITDA. Last year we had a loss of about INR 24, 25 crore in our JVs. This year we will be in a net profit.

Speaker #3: geographically, we have plants in the south, north, and, west. So there's only so much we can buy from the west. Therefore, in the north and, in the south, we have, more demand than, what we can procure.

Speaker #3: procuring from Murthy beyond the point becomes contraproductive because of freight. So from that point of view, we're looking very good as far as demand is concerned.

Speaker #3: Therefore, we are extremely confident of keeping our own production at 100% capacity utilization, which is a major, major kicker to the EBITDA.

Speaker #3: And therefore, we are, extremely confident of the EBITDA. last year, we had a, a loss of about 24, 25 crore rupees in our JVs.

Speaker #3: This year, we will be in a net profit. So the swing will be more than 30 crore rupees from last year. So, we, that's s-something which we are very confident on for terms of the volume.

Abhishek Somany: The swing will be more than INR 30 crore from last year. That is something which we are very confident in terms of the volume. I have already answered as to why we are seeing that we will not be in a position to reduce our capacity, which is our own capacity.

Speaker #3: And, I've already answered as to why we are, seeing that we will not be able to we will not be in a position to reduce our capacity.

Speaker #3: Which is our own capacity.

Speaker #2: Understood, sir. This is helpful. And sir, having said this, you know, with the EBITDA margin sustaining at these levels, I believe the guidance for FY27 was 100 to 150 basis points higher than FY26.

Shruti Mulchandani: Understood, sir. This was helpful. Sir, having said this, with the EBITDA margin sustaining at these levels, I believe the guidance for FY27 was 100 and 150 basis points higher than FY26. Are we in a position to increase the guidance on that front?

Speaker #2: So, are we in a position to increase the guidance on that front?

Speaker #3: Yes, absolutely. It all depends on the capacity utilization and product mix change. the big kicker, like I said, was production, capacity utilization. So as long as that is happening, EBITDA margins are sustainable and only become better.

Abhishek Somany: Yes, absolutely. It all depends on capacity utilization and product mix change. The big kicker, like I said, was capacity utilization. So as long as that is happening, EBITDA margins are sustainable and will only become better. Like I said, our JVs are also coming to a situation where it is in a profit, but there is a lot more which we can do within the JVs to increase their profit. That is exactly what I mentioned earlier in the call, that we are doing some balancing equipment to increase capacity in the JVs and in our wholly-owned subs to further augment capacity. When we augment that capacity, everything there goes to the bottom line. So, very confident of maintaining this EBITDA margin for now and then increasing it as and when the quarters unfold in Q3 and Q4.

Speaker #3: like I said, our JVs are also, coming to a situation, where it's in a profit. But there's a lot more which we can do within the JVs to, increase their profit.

Speaker #3: And that's exactly what I mentioned earlier in the call—that we're doing some balancing equipment to increase capacity in the JVs and in our wholly owned subsidiaries to further augment capacity.

Speaker #3: And, and when we—when we augment that capacity, everything there goes to the bottom line. So, very confident of maintaining this EBITDA margin for now and then increasing it, as and when the quarters unfold in Q3 and Q4.

Speaker #2: Understood. And, sir, the sort of balancing equipment, so the, that capacity will also come in in the 528, along with the 9 million square meter plant, or that will be reflecting in the 527?

Shruti Mulchandani: Understood. Sir, just on the balancing equipment. So that capacity will also come in FY28 along with the 9 million square meter plant, or that will be reflecting in FY27?

Speaker #3: No, 9 million square meters will only come in, towards third quarter of next year. That is, that is a virtually, greenfield plant. So everything needs to be made from the land building capital.

Abhishek Somany: No, 9 million square meters will only come in towards the Q3 of next year. That is virtually a greenfield plant. So everything needs to be made from the land building capital. Sorry, land we have, but the building and capital, all that happen only in 15 months.

Speaker #3: So sorry, the land we have, but the building and capital and all that, that happened only in 15 months.

Speaker #2: the balancing equipment, the, the bottom margin?

Shruti Mulchandani: The balancing equipment, the bottleneck one?

Speaker #3: That is happening now, which most of which will be concluded by, end of quarter 3.

Abhishek Somany: That is happening now, most of which will be concluded by end of Q3.

Speaker #2: Got it. Got it. And because they are value-added for the margins, will these higher than what we have today?

Shruti Mulchandani: Got it. Because they are value added, so the margins will be higher than what we have today.

Speaker #3: Correct. So in, in quarter 4, you will get the effect of all those, efforts which we have taken. And you'll, you'll demonstrate that. Until then, we will hold this margin or maybe slightly better.

Abhishek Somany: Correct. In Q4, you will get the effect of all those efforts which we have taken, and we will demonstrate that. Until then, we will hold that margin or maybe slightly better.

Speaker #2: Understood. And, sir, just lastly, what would be the capex, you know, the absolute amount for a 527 and 28, with these, plants that we have?

Shruti Mulchandani: Understood. Sir, just lastly, what would be the CapEx, the absolute amount for FY27 and FY28, with these plants that we have?

Speaker #3: So from now to 20, 7 end, we have already, looked at approximately a 275 crore rupee outlay, which includes the 220 crore rupee plant, plus balancing equipment, in various other plants.

Abhishek Somany: From now to 2027 end, we have already looked at approximately a INR 275 crore outlay, which includes the INR 220 crore plant, plus balancing equipment in various other plants and some more balancing equipment in the bathware sanitary ware plant. All put together, we are at about 275 and we will be funding about 65% to 70% of this through internal resources. Again, we are not putting pressure on the balance sheet at all. The loan which will be taken, the small loan which will be taken in the joint venture with no corporate guarantee from Somany's side. The joint venture is a 60-40. Therefore, that is going to be in that joint venture.

Speaker #3: And, some more balancing equipment in the, Bathura Sanitary Ware plant. So all put together, we are at about a 275. And we will be funding, about 65, 70 percent of this, through internal approval.

Speaker #3: So again, we're not putting pressure on the balance sheet at all. And the loan which will be taken, the small loan which will be taken in the, joint venture with no corporate guarantee from Jamani's side.

Speaker #3: and the joint venture is a 60/40. so therefore, that's going to be in that joint venture.

Speaker #2: Understood, sir. This was helpful. thank you for the answers.

Shruti Mulchandani: Understood, sir. This was helpful. Thank you for the answers.

Speaker #1: Thank you. Before we take the next question, a reminder to all the participants, if you wish to register for a question, you may press star and 1 now.

Operator 2: Thank you. Before we take the next question, a reminder to all the participants, if you wish to register for a question, you may press star and 1 now. The next follow-up question comes from the line of Saket, an individual investor. Please go ahead.

Operator: Thank you. Before we take the next question, a reminder to all the participants, if you wish to register for a question, you may press star and 1 now. The next follow-up question comes from the line of Saket, an individual investor. Please go ahead.

Speaker #1: The next follow-up question comes from the line of Saqib, an individual investor. Please go ahead.

Speaker #4: And, sir, I wanted to, like, last quarter going standalone, we had 82%. So going forward, do we see this situation further increasing, sir?

[Company Representative]: Sir, I wanted to know, last quarter you told standalone were 18%. Going forward, do you see this expansion further increasing, sir?

[Individual Investor] (Private Investor): Sir, I wanted to know, last quarter you told standalone were 18%. Going forward, do you see this expansion further increasing, sir?

Speaker #3: You mean capacity utilization?

Abhishek Somany: You mean capacity utilization?

Speaker #4: Yeah, yeah, sir.

[Company Representative]: Yeah.

[Individual Investor] (Private Investor): Yeah.

Speaker #3: Yes, capacity utilization will further improve.

Abhishek Somany: Yes, capacity utilization will further improve.

Speaker #4: So, sir, what level it can go, like, maximum?

[Company Representative]: Sir, what level it can go, like maximum?

[Individual Investor] (Private Investor): Sir, what level it can go, like maximum?

Speaker #3: In the first quarter, in April, we had some lines which were shut. A couple of lines were in maintenance. This quarter also, we had two lines under maintenance.

Abhishek Somany: In Q1, in April, we had some lines which were shut. A couple of lines were in maintenance. This quarter also, we had two lines under maintenance. But it will improve slowly and steadily because we are doing a lot of balancing equipment to augment capacity, which is only going to lead to better EBITDA margin in the future. But I think the current scenario would be that we will be slightly better in this quarter in capacity utilization.

Speaker #3: So but it will improve, slowly and steadily, because we are doing a lot of balancing equipment, to augment capacity, which is only going to re lead to better EBITDA margin in the future.

Speaker #3: But I think the current scenario would be that we'll be slightly better in this quarter in capacity utilization.

Speaker #4: So, like, the current capacity we have, sir, and at, at current prices of going for tiles, what would the maximum revenue we can have with JV and our own capacity?

[Company Representative]: So like the current capacity we have, sir, and at current prices of going for tiles, what is the maximum revenue we can have with JV and our own capacity?

[Individual Investor] (Private Investor): So like the current capacity we have, sir, and at current prices of going for tiles, what is the maximum revenue we can have with JV and our own capacity?

Abhishek Somany: Approximately INR 3,700 crores. More or less, give or take INR 50 crores at today's prices.

Speaker #3: Approximately 300, approximately ₹3,700 crores. Yeah, more or less, give or take ₹50 crores at today's prices.

Speaker #4: Today's prices. Okay. And with the bottleneck we are doing by year end, it will actually increase by 300 crores more.

[Company Representative]: Okay. And with the bottleneck we are doing by year-end, it will actually increase by INR 300 crores more.

[Individual Investor] (Private Investor): Okay. And with the bottleneck we are doing by year-end, it will actually increase by INR 300 crores more.

Abhishek Somany: Yes, partly yes.

Speaker #3: yes, partly, yes.

Speaker #4: Okay. Okay. Thank you so much.

[Company Representative]: Okay. Thank you.

[Individual Investor] (Private Investor): Okay. Thank you.

Speaker #1: Thank you. Participants, if you wish to ask a question, you may press star and 1.

Operator 2: Thank you. Participants, if you wish to ask a question, you may press star and one.

Operator: Thank you. Participants, if you wish to ask a question, you may press star and one.

Abhishek Somany: We conclude.

Speaker #4: We conclude.

Operator 2: Sir, we have one more follow-up question. Should we take that?

Operator: Sir, we have one more follow-up question. Should we take that?

Speaker #1: sir, we have, one more follow-up question. Should we take that? Thank you. we have a next follow-up question from Saqib, an individual investor. Please go ahead.

Abhishek Somany: Sure.

Operator 2: Thank you. We have our next follow-up question from Saket, an individual investor. Please go ahead.

Operator: Thank you. We have our next follow-up question from Saket, an individual investor. Please go ahead.

Speaker #4: Sir, I just had one further query. Like, we see the industry leader is having margins close to 80, 90 percent. And we are having close to 11 percent as of now.

[Company Representative]: Sir, as you said, one further query, like we see the industry leader is having margins close to 18% to 19%, and we are having close to 11% as of now. So what is the reason that we have such a stark difference between the top and second player?

[Individual Investor] (Private Investor): Sir, as you said, one further query, like we see the industry leader is having margins close to 18% to 19%, and we are having close to 11% as of now. So what is the reason that we have such a stark difference between the top and second player?

Speaker #4: So what is the reason that we have sort of stark difference between the top and second player?

Speaker #3: It's, I mean, there's many, many, areas of discussion. So maybe it's best we take it offline.

Abhishek Somany: There's many areas of discussion, so maybe it's best we take it offline.

Speaker #4: Okay, sir. Thank you, sir.

[Company Representative]: Okay, sir. Thank you.

[Individual Investor] (Private Investor): Okay, sir. Thank you.

Speaker #1: Thank you. Ladies and gentlemen, that was the last question in the queue. As there are no further questions, I would now like to hand the conference over to Mr. Somani for closing remarks.

Operator 2: Thank you. Ladies and gentlemen, that was the last question in the queue. As there are no further questions, I would now like to hand the conference over to Mr. Somany for closing remarks.

Operator: Thank you. Ladies and gentlemen, that was the last question in the queue. As there are no further questions, I would now like to hand the conference over to Mr. Somany for closing remarks.

Speaker #3: Thank you, ladies and gentlemen, for being patient and joining us for the, Q1, earnings call. For FY26/27, we remain positive, for the entire year.

Abhishek Somany: Thank you, ladies and gentlemen, for being patient and joining us for the Q1 earnings call for FY26-27. We remain positive for the entire year for both the single-digit volume growth and also a double-digit margin, or the margin which we have given today. We will only better that going forward and all efforts the company is doing to make sure that we increase even on the volume front. Look forward to meeting you all in the Q2 earnings call. Thank you so much.

Speaker #3: for both the, single-digit margin, single-digit, volume growth and also, double-digit margin, or the margins which we've given today, we'll only better that going forward.

Speaker #3: And, all efforts, the company is doing to make sure that we increase even on the volume front. look forward to, meeting you all in the, quarter quarter 2 earnings call.

Speaker #3: Thank you so much.

Speaker #1: Thank you. Thank you very much. On behalf of SKP Securities Limited, that concludes the conference call. Thank you, everyone, for joining us. Ladies and gentlemen, and you may now disconnect your lines.

Operator 2: Thank you. Thank you very much. On behalf of SKP Securities Limited, that concludes the conference call. Thank you everyone for joining us. Ladies and gentlemen, you may now disconnect your lines. Thank you.

Operator: Thank you. Thank you very much. On behalf of SKP Securities Limited, that concludes the conference call. Thank you everyone for joining us. Ladies and gentlemen, you may now disconnect your lines. Thank you.

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Q1 2027 Somany Ceramics Ltd Earnings Call

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Somany Ceramics

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