Key Financial Performance Q1 FY27

  • Sales volume growth: 3% year-over-year
  • Sales value growth: 24% year-over-year
  • EBITDA margins: 11.6% (improved by 360 basis points from previous year)
  • Standalone capacity utilization: 83% (vs 72% in Q1 FY26)
  • Joint ventures: INR3 crores profit (vs INR10 crores loss in Q1 FY26)
  • Working capital days: Reduced from 17 days to 12 days

Operational Highlights

  • April production impacted by Morbi shutdown (1.5 months closure)
  • May and June demand described as "pretty decent"
  • July demand "not bad" despite rains across India
  • Gas price volatility with monthly increases, fully passed through to customers
  • Price increases implemented: 16-18% average
  • Blended natural gas cost: Approximately INR68
  • Morbi exports down 50-60% due to geopolitical reasons and freight issues

Capacity Expansion Plans

  • New 9+ million square meter plant in South India
  • Capex outlay: INR220 crores
  • Expected revenue potential: INR350 crores
  • Completion timeline: 12-15 months (Q3/Q4 FY28)
  • Additional 4-5 million square meter capacity through debottlenecking in existing plants (Bahadurgarh, Gujarat, Morbi, South)
  • Debottlenecking completion: Mid-Q3 FY27, fully operational by Q4 FY27

Segment Performance

  • Sanitaryware, bath fitting, and building materials divisions growing healthily
  • Construction chemicals: Capacity expansion in South and North (North capacity went on stream last month)
  • Somany Max (bathware): Loss reduced to INR1+ crores from INR7 crores loss in Q1 FY26
  • Project business: Currently 7-8% retail, 10-11% government, expected to grow 3-4%

Financial Position

  • Total FY27 capex plan: INR275 crores (including South plant and balancing equipment)
  • Funding: 65-70% through internal accruals
  • No corporate guarantees for joint venture loans
  • Advertising spends: In line with expectations
  • Receivables: Improved and in line
  • Inventory: Reduced significantly due to Morbi shutdown helping clear old stock

Management Guidance

  • Volume growth: Mid-single digits for FY27
  • EBITDA margins: Maintain at 11%+ levels with target to reach 12%
  • Confidence in maintaining operational efficiencies and JV profitability
  • Channel inventory: Lean due to gas price volatility concerns

Geographic Pricing

  • Blended natural gas price: INR68
  • South and Morbi: Mid-70s (INR)
  • North: INR68-69

Market Context

  • Morbi operations resumed 100% production on expensive gas from GEL (formerly GSPCL)
  • 15-17% of Morbi capacity permanently shut
  • Price gap with Morbi players has narrowed due to their higher price increases

Conference Call Participants

Management: Mr. Abhishek Somany (MD & CEO), Mr. Shrivatsa Somany (Head-Bathware), Mr. Ameya Somany (Joint President), Mr. Sailesh Raj Kedawat (CFO)

Moderator: Mr. Navin Agarwal (SKP Securities Limited)