SOMANYCERA - Somany Ceramics Limited Share Price

In the earnings call on May 15, 2026, management provided a cautiously optimistic outlook for Somany Ceramics Limited. The management, led by MD & CEO Mr. Abhishek Somany, outlined that domestic demand saw gradual improvement in early 2026, though geopolitical disruptions affected performance in March. Sales growth for Q4 was reported at 6%, with an annual growth of 5%. EBITDA improved to 11.4% for Q4 and 9.3% for the full year.

Key forward-looking points include:

1. Capacity Utilization: The company achieved a capacity utilization rate of 82% in Q4, indicating operational efficiency, although full-year utilization was approximately flat at 79%.
2. Sanitaryware Growth: The sanitaryware segment saw an 8% growth for the year, closing at INR 320 crores"”up from INR 296 crores. A double-digit growth target was set for the upcoming year.
3. Margin Improvement: Management aims to improve EBITDA margins by at least 1.5% or more in the coming year, positioning margins to potentially reach mid-teens.
4. Gas Prices: The company anticipates continued volatility in gas prices due to geopolitical factors, emphasizing that significant hikes in gas prices can impact operational costs.
5. Dealer Expansion: There was a robust addition of 200 net new dealers, bringing the total to approximately 3,100, supporting sales growth.
6. Future Demand: Management noted a potential pent-up demand in the market due to supply disruptions earlier in the year.

Overall, barring further geopolitical shocks, Somany Ceramics is optimistic about leveraging market disruptions to gain from the branded and organized segments of the tile industry.

Question 1: "How sustainable is the improvement in receivable days and working capital? Where can we see the numbers in '27?"

Answer: I hope to maintain our receivable days around the same area, maybe fluctuating by a day or two. Our working capital has improved substantially due to reduced stock from outsourced vendors and selling off older stock. The sustainability is a question mark given recent delayed responses to price increases. We are currently seeing pent-up demand, expecting it to rise as tile remains a favored choice. While we're operating at 100% capacity, some demand may take longer to manifest due to broader economic factors.

Question 2: "Can you break up the demand growth for January, February, and March?"

Answer: In January and February, we achieved decent single-digit growth despite December being a heavy month. March was impacted by not pushing material due to vendor price concerns. This led to a strategic decoupling from March's performance as we focused on clearing inventory rather than inflating March sales numbers. We anticipated a slowdown in March which ultimately played out as planned.

Question 3: "What are the gas prices in Q4 and currently by region?"

Answer: For Q4, the gas prices were relatively constant due to stability before March: North was around INR45, South at approximately INR50, and West close to INR46. Currently, Morbi's price stands at roughly INR74, while the North's is about INR3-4 less. It's important to note that prices are highly volatile at this stage, but the Q4 pricing offers a good baseline.

Question 4: "Is there a tipping point where it becomes unfeasible to produce tiles due to gas cost?"

Answer: We haven't encountered such a tipping point yet. Prices are historically comparable to two years ago, and tile remains the cheapest option for flooring. Unless there's an unprecedented spike in gas prices, our factories should remain operable. The market has absorbed significant cost increases without prior crisis-related dysfunction.

Question 5: "What is the current capacity utilization of Morbi, and what do you expect moving forward?"

Answer: Currently, around 60-65% of Morbi is operational since they regained gas supply on May 1st. It's expected to rise to 85% by the end of May. However, labor shortages are causing disruptions, and if demand doesn't recover soon, Morbi could face operational challenges in the coming months. Our operations are currently running at 100% capacity across all plants, except a few that are not value-added.

Question 6: "Given the competition is gaining market share, how do you assess your volume growth and realization?"

Answer: We prioritized selling non-JV materials, which affected volume growth compared to competitors. While our realizations increased by INR6 year-on-year, we focused on strategically clearing older stock to avoid potential price hikes from vendors. Realization variance is a result of a different product mix sold, impacting volume comparisons with competitors.

Question 7: "Can we see margins improve from 9.3% to mid-teens?"

Answer: Yes, we anticipate a margin improvement from 9.3% by at least 150 basis points. If gas prices stabilize, margins could trend towards mid-teens. We're currently finding that we'd be able to control costs and pass through most inflation to our consumers, particularly in the retail segment.

Question 8: "What are your future capex and debt repayment plans?"

Answer: Our capex for the year will be routine, focusing on balancing equipment to improve efficiency across our plants. We're expecting to spend around INR70-80 crores this fiscal, with no significant new investments planned currently as past JVs are now yielding benefits and enabling us to improve overall profitability.

These questions and answers encapsulate the key highlights and major inquiries from the earnings call transcript, without altering any critical details or figures.