Q1 2027 Cera Sanitaryware Ltd Earnings Call Transcript
Key Points
- Revenue grew 19.5% year-on-year, driven by strong volume growth in both sanitaryware (14%) and Faucetware (25%).
- Pricing actions taken in March and May 2026 have been well-absorbed by the market, with cumulative price increases of 12% in sanitaryware and 16% in Faucetware.
- Working capital improved significantly, with inventory days down from 80 to 68, receivables down from 38 to 30 days, and net working capital cycle improved from 75 to 50 days.
- The company maintains a strong balance sheet with cash and cash equivalents of INR943 crores, supporting future investments and growth.
- Management remains confident in achieving FY '27 revenue growth guidance of 18-20% and EBITDA margin guidance of 13.5-14%, despite Q1 margin pressures.
- The extension of the dealer management system to a retailer loyalty program enhances channel engagement and operational efficiency.
- The new brand campaign with Kriti Sanon is expected to strengthen brand visibility and consumer engagement, with a planned INR85 crores investment in brand-building for FY '27.
- EBITDA margins declined to 10.1% in Q1 FY '27 from 13.1% in Q1 FY '26, impacted by one-time and transitional factors.
- Input costs, particularly brass and gas, remain elevated, with gas costs up from INR33.17 to INR48.43 per cubic meter year-on-year.
- The project business has not yet reflected price increases, with contracts expected to transition to revised pricing only post-Q2, delaying margin recovery.
- A one-time provision for long-term worker settlement (INR6.3 crores) and under-absorption of fixed costs due to single kiln operation (INR3.7 crores) negatively impacted Q1 profitability.
- The company faces ongoing uncertainty in raw material prices, with brass prices rising to INR900 per kg, potentially necessitating further price hikes.
- The resignation of a key management personnel (Mr. Baliga) responsible for Sanitare and Polyplus could pose transition risks, though the company has a succession plan.
- Capacity utilization in sanitaryware remains low at 61%, indicating underutilization and potential inefficiencies.
Ladies and gentlemen, good day, and welcome to the Earnings Conference Call of Cera Sanitaryware Limited. (Operator Instructions) Please note that this conference is being recorded. I now hand the conference over to Mr. Devrishi Singh from CDR India. Thank you, and over to you, sir.
Thank you, Neeraj. Good morning, everyone, and thank you for joining us on the Earnings Conference Call for Cera Sanitaryware Limited for Q1 FY '27 earnings, which were announced yesterday. We have with us today the management team comprising Mr. Vikas Kothari, CFO; and Mr. Deepak Chaudhary, VP Finance and Investor Relations of Cera Sanitaryware. We will start with brief opening remarks from the management, following which we will open the call for Q&A. A quick disclaimer before we begin. Some of the statements made in today's conference call may be forward-looking in nature, and a detailed note in this regard is contained in the results document that have been shared with all of you earlier. I would now turn the call over to the
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