Ladies and gentlemen, good day and welcome to the earnings conference call of Cera Sanitaryware Limited. 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 this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. In our hands of the conference, over to Mr. Devrishi Singh from CDR India. Thank you, and over to you, sir.
Thank you, Neerav. Good morning, everyone, and thank you for joining us on the earnings conference call for Cera Sanitaryware Limited for Q1 FY2026 earnings, which were announced yesterday. We have with us today the management team comprising Mr. Vikas Kothari, CFO, and Mr. Deepak Choudhury, Vice President of Finance and Investor Relations. 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 documents that have been shared with all of you earlier. I will now turn the call over to the management for their opening remarks. Thank you, and over to you, Deepak.
Thank you, Devarishi. Good morning, everyone. On behalf of the management team of Cera Sanitaryware Limited, I would like to extend a warm welcome to all of you on our Q1 FY2026 conference call. I will begin by sharing a brief update on our operational and strategic progress, following which our CFO, Mr. Vikas Kothari, will give you the financial highlights for the quarter. In the backdrop of continued softness in consumer demand across key markets, we are pleased to report a stable performance for this quarter. Our quarter-by-segment recorded a year-on-year growth of 13.4%, supported by stable demand and continued acceptance of our expanded SKU portfolio. In contrast, demand in the sanitaryware segment remained soft during the quarter. However, we remain confident that long-term tailwinds will gradually aid recovery in this category.
Over the past few years, we have consistently focused on building a stronger, more agile organization through deeper brand segmentation, new channel strategies, and a sharper innovation pipeline. We remain confident that these actions will translate into tangible momentum across key growth levers going forward, as and when the market conditions improve. Our B2B segment continues to gain momentum, contributing 38% of revenues during the quarter, compared to 36% in Q1 FY2025. We are witnessing healthy other inflows from the real estate sector, driven by increased construction activity and improved developer sentiment. Cera's strong brand equity, product reliability, and execution capabilities have helped deepen our presence in the B2B space, further strengthening our position as a preferred partner for large-scale projects. I would like to update you on two key strategic initiatives.
The company has been consistently advancing its strategy for the Sanitare brand, which is positioned at the top end of our portfolio. To give you a bit more color, Sanitare today boasts of a much-expanded portfolio with eight full sanitaryware ranges and nine closetware collections, and a newly introduced wellness range, including whirlpools, steam cabins, and high-end showers. This makes it a comprehensive solution for the discerning premium customer. We are engaging in close relationships with the architects and HNIs, supported by a dedicated sales and business development team of over 50 professionals trained specifically for the luxury segment. As of Q1 FY2026, we have 23 Sanitare channel partners, with showroom displays upgraded to 650 to 800 square feet to create a more immersive brand experience. Our target is to operationalize around 45 to 50 stores by FY2026 end.
Importantly, these dealers are new and exclusive to Sanitare, ensuring brand purity and focus. The pricing strategy is competitive with other luxury brands but offers better margins to our partners. We have also introduced a dedicated institutional catalog and pricing to address project-led premium demand, a first for this brand. These actions reflect a significant shift in our approach. Sanitare is no longer a tactical strategy, it is now a fully developed brand platform designed to capture a larger share of the luxury segment and drive long-term value creation. We believe the groundwork we are laying today positions Sanitare for meaningful traction as the market environment improves. In parallel, during Q1 FY2026, we successfully launched a new value brand, Polyplus, marking Cera's strategic entry into the deep value segment.
Polyplus is thoughtfully designed to cater to the aspirational needs of households in Tier 4 cities, towns, and villages, targeting an approximately INR 9,000 crore market currently dominated by the unorganized players. Polyplus will offer both PTMT and brass variants and follows a distinct go-to-market strategy via hardware stores. We aim to appoint 140 distributors with about 5,000 retail touchpoints by the end of one year, supported by a 70-member field force. Product pricing is positioned midway, bridging the typical gap between the low-cost PTMT and high-end brass products to gently push uptradition among the usual consumers. To build mindshare among influencers, we have also extended a popular Star Plumber loyalty program to this new channel. Despite being an affordable offering, Polyplus is expected to be margin accurate, with margin levels comparable to or even better than our current branded margins.
Early market feedback has been encouraging, and we believe that this initiative will open up meaningful long-term growth opportunities for Cera in this underpenetrated segment. By establishing clear brand segmentation and tailoring our product and channel strategies to suit each target group, we are not only expanding our market reach but also ensuring a sharper focus and positioning across categories. This inclusive approach, spanning a wide range of price points, material preferences, and regional demand clusters, reinforces our ability to adapt to changing market dynamics while staying true to our core values of quality, innovation, and customer trust. While this scale-up will take place over time, the initiatives underway today lay a solid base to capture future opportunities. While the timing of a broad-based recovery remains uncertain, we remain optimistic about the future prospects of the industry.
The long-term market is expected to stay strong, supported by continued normalization of the sector, rising aspirations of the consumers, and supporting policy initiatives such as urban redevelopment, housing schemes, and sanitation infrastructure. These structural drivers, coupled with a strong brand and distribution reach, lay the groundwork for sustained outperformance. We believe that the investments we are making today in brands, in distribution, and in product innovation will position Cera to benefit disproportionately when the market conditions improve. Our focus remains on building an organization that is future-ready, resilient, and aligned with the evolving aspirations of the Indian consumer. To conclude, Q1 FY2026 was marked by a stable performance despite a challenging demand environment. While the near-term softness is persisting, we remain confident in the long-term potential of the industry and our own preparedness to capitalize on the future opportunities.
With ongoing investments in brand architecture, channel segmentation, and new product development, backed by strong in-house capabilities, our strategic focus remains on disciplined execution, deeper consumer connect, and creating long-term value for all stakeholders. With this, I would like to hand over to Mr. Vikas Kothari, our CFO, to present the operational and financial highlights for the quarter ended 30th June 2025. Thank you, and over to you, Mr. Vikas Kothari.
Thank you, Deepak, and a very good morning to everyone. I will now take you through a brief overview of the company's financial performance for the quarter ended June 30, 2025. Revenue from operations for Q1 FY2026 stood at INR 419 crore, marking a 5.4% increase over INR 398 crore in Q1 FY2025. EBITDA remained stable at INR 72 crore compared to the same quarter last year. EBITDA margin declined slightly to 16.4% from 17.5% in Q1 FY2025, primarily due to inflation-driven cost increases and initial expenses related to the launch of new brands, Sanitare and Polyplus. Gas costs witnessed an increase during the quarter, with the weighted average cost standing at INR 33.17 per cubic meter in Q1 FY2026 compared to INR 31.64 per cubic meter in Q1 FY2025. Despite the rise, our costs remained well below the industry average.
During the quarter, the gas consumption was sourced 84% from GAIL and 16% from Sabarmati. Overall, gas costs as a percentage of revenue stood at 3.6%. For the quarter under review, revenue contributions were as follows: sanitaryware at 50%, faucetware at 39%, tiles at 10%, and wellness at 1%. On a YOY basis, faucetware revenues grew by 13%, tiles by 5%, and wellness by 15%, while sanitaryware revenues remained largely flat. Our core categories, sanitaryware and faucetware together, accounted for 89% of the total revenues. Capacity utilization stood at 92% for faucetware and 86% for sanitaryware during the quarter. In terms of the product positioning, 43% of our sales came from the premium category, 35% from mid-segment, and 22% from entry-level products. From a geographical standpoint, Tier 3 cities led with 42% of sales, followed by Tier 1 at 36% and Tier 2 at 22%.
Profit after tax stood at INR 47 crore, broadly in line with the previous year's quarter. Earnings per share for the quarter was INR 36.08 compared to INR 36.11 in Q1 FY2025. In terms of the working capital management, inventory days increased from 75 to 80 days, receivable days from 32 to 38 days, and payable days increased from 41 to 43 days, leading to a YOY increase in the net working capital from 66 to 75 days. However, on a sequential basis, working capital has improved by 5 days, reflecting enhanced operational discipline and stronger collection efforts. As of June 30, 2025, our cash and cash equivalents stood at INR 778 crore. For financial year 2026, we have marked a total CapEx outlay of INR 23 crore. This includes routine maintenance as well as select investments towards brand building and expansion of our retail footprints.
We will continue to follow a disciplined capital allocation approach aligned with our long-term strategic priorities. We remain confident in Cera's financial health, strength, and long-term growth prospects. Backed by a robust balance sheet, ongoing efficiency improvements, and prudent working capital management, we are well positioned to navigate near-term uncertainties and seize emerging opportunities as the demand environment gradually recovers. With this, I would now request the moderator to open the line for Q&A. Thank you very much.
Thank you very much. We'll now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Arjun Guria from IDBI Capital. Please go ahead.
Hi, sir. Thank you for the opportunity. I have two, three questions. First, on the project sales side, the fact is growing over quarter on quarter from last few quarters. Can you help us to understand how it would be as a percentage of sales in the near future? Also, can you help us what kind of typically margins would be there and the micro markets which are seeing the exponential growth in the project business.
Okay. Thank you, Arjuna. Regarding the project, definitely EPC, over the last few quarters, we are seeing that the real estate market is moving well. This is also evidenced in Cera Sanitaryware Limited's project bank portfolio. On a YOY basis, if we compare Q1 versus Q1 of last year, we have registered a growth of 32% in our project bank. These are the project orders which we have won. We are seeing the positive trend in the project bank over the last two or three quarters. This trend will continue. This trend is now going to support, as considering the overall positive macroeconomic trends, which are visible in our sector, liquidity conditions are getting improved. This will also support our retail segment. I think project business is growing, and we are getting larger order values of contracts over a period of the last three or four quarters.
Nice. Any guidance on margin profile and any micro market growth?
Yeah. As far as project business is concerned, definitely the margins are a little lower as compared to the retail. Margins are lower by 6%- 7% on account of the discounts being offered higher in the project category.
Okay. Is it possible to basket the sales among the Sanitare, Cera Lux, and Cera for project sales?
As of now, these categories are just developing. The sales numbers in respect of Cera and Cera Lux is negligible. We'll keep on updating you. Maybe we'll start updating you by the end of the year when the numbers start becoming significant. As of now, you can tell that most of the numbers that we are reporting are coming from Cera.
Okay. Maybe one more question. This is Polyplus. Can you help us to understand the pricing strategy, some outsourcing mix, and the number of SKUs we should expect in FY2026?
In respect of Polyplus, I'll just give you a broad outlook in respect of the product, the launch, and the markets that we are intending to target. As we mentioned, the Chairman has mentioned in his press release also, that Polyplus is intended to target the Tier 3, 4, and the rural market. This is one segment where Cera has been completely absent till date. With the launch of this Polyplus, we are targeting the consumers, which are kind of untouched by the Cera products. The primary consumer right now, as we are saying, are the ones who are using the PTMT products. We have launched a slew of polymer products as well as brass products. The brass products have been priced at a point which is in relation midway between the current offerings of Cera and the PTMT products, which are being currently offered by the unorganized players.
The idea is to pull them from the current buying pattern towards the more aspirational and more longer-lasting products, which will also meet the price point, alternacy quality needs of the particular range of consumer. Apart from that, we are also targeting a kind of replacement market because we are targeting items which will be kind of small value, but which will be replaced very pretty fast. That will consist of the systems, the seat covers, the health pockets, the connecting pipes, a slew of other such polymer products, which currently we are doing it for our own products, but we are not targeting the replacement market. The idea is over here that rather than being bundled with our original products along with our sanitaryware products and along with our faucetware products, these are targeted more at the replacement market. The idea is that margins would be good.
We are expecting that the margins should be higher than what we are getting for our blended margin, which we are getting for our current range of products. It should be in the range of the EBITDA margin should be in the range of 24%- 25% for this Polyplus range that we're talking about. At the same time, we are also offering a higher margin to the distributors. The kind of margins which you are offering to the distributor will also be quite high so that it becomes attractive for them to stock also the products from their point of view. The main selling point would be the kind of quality that we'll be offering at the kind of price range that we'll be offering with the Cera backing.
The top line target for the current year would be kind of in the region of, you can say, INR 25-INR 30 crore because of the sales. As of now, we are still onboarding the team, and the sales should be starting by, let's say, end of September, beginning of October. We'll be having only six months in the current year. By, let's say, end of three years, we are targeting that it should be constituting something like 5% - 7% of our total turnover for the Polyplus range.
Right. That helps. Last year, it will be completely outsourced, the manufacturing?
As of now, it will be outsourced. Like the brass products, maybe some things would be in-house and some things would be outsourced. The polymer part would be completely outsourced. As we go forward, depending upon the volume, once we reach a critical volume, maybe we'll have our own plan coming up. As of now, it will be completely outsourced.
Sure. Thank you so much, and all the best, sir.
Thank you, team.
Thank you. Next question is from the line of Praveen Sahai from PL Capital. Please go ahead.
Thank you for the opportunity. Sir, my question related to your, you know, the segment entry mid and premium. In the last two years, even for this quarter, if I look at your mid segment, it has outperformed your entry and the premium segment. These launches, whether it's Sanitare or the Polyplus, these two are, in the view of that to improve your entry and the premium category, way forward. Is it the case? One. The second thing is, even giving a higher distribution margin in the, you know, value, value product which you had launched, you are talking about the margin to be on the higher side. Even, mostly you will outsource as well, manufacturing. Can you please, you know, give some more color, like, how it is, you know, the margin, would be at the same level of what we are doing right now?
I'll take your question in two parts. The first part which you asked was that are we launching with the Sanitare and the Polyplus, to kind of supplement the mid range that has been the strongest in our case? I would be like a completely different view on this. The way that we are seeing it within the company is, both the brands, the Sanitare and the Polyplus, are kind of targeting a customer base which currently Cera is not targeting. Polyplus is very different. It's going one level below the NP range that Cera has. The pricing, the product profile, everything is completely different from the products which are currently being offered by Cera. It is not really kind of trying to bolster the entry range of Cera.
It is a range which is different from what we are offering in Cera and to a customer segment which is different from what we are currently catering to at Cera. The same thing is true for Sanitare also. Sanitare is kind of not targeting the premium customer which Cera targets. Cera is more targeting the, you can say, mass premium kind of a range which is being offered by Cera. Sanitare would be more on the upper, like targeting the HNIs and the higher, more projects which are more premium end. Both are targeting customers which are currently not being serviced by the Cera product profile. In respect of the margin, the kind of margins that we are having, in spite of being outsourced and why we are getting higher margins.
In the case of Sanitare, higher margins would be much obvious because it is more of a premium offering. The kind of margins which you have, the kind of pricing which is happening over there, would be obviously higher than what we're getting for the Cera segment. In case of Polyplus, the same thing, like what we have been able to source, is at quite a good margin. Even, like we have been able to source products at prices which are quite reasonable. We are confident that the margins that we are talking about is something which will be very easily achievable.
Okay. Thank you for that. How much is the advertisement expense for this quarter?
For the quarter, the advertisement expense was around INR 9.3 crore as compared to the previous year's quarter, around INR 11.4 crore. This differential which is there is the phasing impact, reason for being there are certain activities which are planned in the subsequent quarters. That will be the implication in Q2 or Q3.
All right, sir. The last question is related to your guidance of the last quarter. You had given to outperform the industry by 6 to 7% and reach INR 29 billion by March 2027, along with a margin of 15 to 16%. Where do you stand on this? You are maintaining this?
As far as the earlier targets which we have given with respect to reaching out 2,900 by March 2027, it is to say in this regard that the market overall, if we see, this was based on the assumption that the markets will perform and the future growth will depend on the sustained recovery in the retail demand. However, we have seen, while demand challenges are likely to persist in the early quarters of this financial year also, apart from having the slowness in the past six to seven quarters, we expect that the signs of recovery will start in the second half of the year. This is supported by what we are saying that there are certain positive macroeconomic trends which are already visible in the current scenario. The rural economy is gaining momentum driven by a strong harvest, increased government spending, and structural reforms.
Liquidity conditions have also improved, and the retail segment is also showing some signs of recovery. Apart from that, as we have clearly told, our project segment, project business is also moving well, where we are having growth in terms of the overall project bank. With all these improving fundamentals, we remain focused on our earlier saying that we will outperform the market by 6% - 7%. This is the part that the recovery should start in the segment, and this is that we will outperform it. The earlier guidance which was given with respect to reaching out 2,900 was based on the assumptions that the market growth will be there in case of sanitaryware at around 7% - 8% and in case of faucetware between 12% to 13% and with a goal to achieve or with a goal to outperform this market growth by 6% - 7%.
However, we have seen that the market growth has fallen short of the expectations, but our long-term strategies remain quite intact, driven by innovation, operational excellence, and market expansion. In this regard, like Deepak Choudhary has told, we have already launched Sanitare and Polyplus to cater to the different segments of the consumers. I think the guidance, what we have given of 6% to 7% outperformance, will be there once the market starts recovering.
Thank you, sir, and all the best for the future.
Thank you.
Thank you. Participants, a kind request to restrict to two questions per participant and rejoin the queue for a follow-up question. Next question is from the line of Akash Shah from UTI Mutual Fund. Please go ahead.
Yeah, hi. Good morning, team. Am I audible?
Yes, sir.
Yeah
Yeah. Hi, hi, sir. Sir, just, I mean, two questions. Sir, I wanted to ask, sir, how much cost has come into the P&L for Sanitare and Polyplus brand?
As of now, the cost which would have gone into the Sanitare and Polyplus would be quite minimal in the sense that the onboarding has just started from the month of July. The staff costs, etc., would have come into the P&L. I can give you a kind of broad outlook in respect of the full year kind of projections that we have once it becomes fully operational, once we have the entire team in place. We are kind of projecting that, more or less, the staff cost should be in the region of INR 13 to 15 crore would be added for these two brands, Sanitare and Polyplus taken together. This is the cost per annum once the entire team comes on board.
Okay. Sir, are there?
You can say for publicity out of that amount that we have earmarked for the company, a specific amount has been earmarked for the Sanitare and Polyplus brands, as well as Lux. Typically, in the first year, the spending would be mostly for the generation of showrooms in the case of Sanitare. Polyplus is something which will not require too much of brand publicity support. It will be more, first year will be kind of setting up the distributors, getting the retail channel in place. Maybe from the next year onwards, we'll start having more expenses towards publicity. For total Sanitare and Lux, out of the amount of INR 60 crores that we typically spend on publicity on a per annum basis, roughly, we can say INR 11 to 12 crores should be going for Sanitare and Lux brand taken together.
Right. INR 11 to 12 crores for Sanitare and Lux, and the rest, INR 35 to 40 crores, would be for Cera brand.
Okay, sir, also just wanted to understand, I mean, this quarter, we saw around 5% growth on the basis of minus 6% growth in the first quarter at 0.25. On a two-year CAGR basis, there was some decline in absolute revenue. I just wanted to ask, going forward, let's say we hope for some recovery in the second half. Are we broadly implying that the growth in full year FY2026 would be, let's say, less than 10%? I mean, what is the broad thought process on, I mean, what is the broad expectation on top line growth fronts in FY2026? If we can break it up in sanitaryware as well as faucet segment, what is the growth that will help?
I think I have answered the question regarding the outlook part, both short term and long term. Having asked about this year's roadmap or this year's how we will progress, we are progressing strongly as far as our operational excellence and the reach with respect to market is concerned. Now, talking about what is going to be the number at the end of the financial year 2026, with the expectations we are having and with some positive things we are seeing on the macroeconomic levels, we understand that the momentum, early signs of recovery have started. We see that this will continue over a period of time. I used to say this is subject to how actual the market will perform.
We understand that with the type of recovery we see from H2 onwards, we expect that we will be ending with a higher single-digit number or maybe start of this double-digit number.
Thank you very much. Akash, I'll request you to come back for a follow-up question, please. Thank you. I request from all the participants, kindly restrict to two questions per participant and rejoin for a follow-up. The next question is from the line of Amit Kajaria from ICICI Securities. Please go ahead.
Thank you for taking up my question, sir. It's pertaining more to the margin outlook for the company. When you look at the project business, since it's growing, the margins are a bit under pressure, and you also see that it's lower than the retail segment. Though you all are growing your Sanitare and the new brand now, it will still be 5% to 7% of sales in coming years. At least for the coming two, three years, do we see that the margins will be sub 15% for the company, given that the major growth will be from projects now?
We expect that the margins should be maintained at a region of 15% - 17% that we have been maintaining in the last few years. We don't anticipate a very high jump coming in, as you mentioned, because of the fact that Sanitare would be constituting a small proportion of the total sales in the next two to three years. However, because of the fact that the project portion is increasing, we don't anticipate too much of a challenge in the overall margin of the company, because we have been taking measures for controlling costs also at the operational side. From our perspective, that number of 15% - 17% is something that is a holy grail and we intend to maintain for the next two to three years.
Okay, sir. Understood. Okay, sir. That's it from mine. Thank you.
Thank you.
Thank you. Next question is from the line of Nirav Parikh from Nivesh Investment Managers . Please go ahead.
Hi, am I audible?
Yes.
Sir, my question was that, you know, obviously, the market is not good right now, but just from a competition perspective, what are the threats that you're currently seeing? If you can just elaborate on that, are we losing market share in any segment? That would be helpful, especially when the market does well and some of the smaller players, you know, players like Jaquar, etc., who are not big in sanitaryware and faucetware. Even if they also start getting aggressive, you know, what is our thought around that? Any thought on that would be helpful.
You're talking about the threats from the competition. Now, basically, what we have found is that over the last six to seven quarters where the market has not been doing too well, it has been subdued. The major kind of problems that we have faced in the market is the kind of discounts which have been offered by the competition because of the fact that they have already got good capacities and they are trying to, the market has not been too great. The discounts have kind of gone up. We have been trying to hold on to the kind of margins that we are making in a particular sector, both in the projects as well as in the retail sector.
We anticipate that once the retail market starts improving, even from the competition side, the kind of higher discounts which have been going at their end should start coming down and reach a level where everybody would want to make profits. That would be true for also the new entrants which are there because as of now, they're more intent on trying to gain volume. As of now, the broad threat which is there in the market is the kind of pricing which is prevailing because of the fact that there has been overcapacity with the existing players and also capacity addition where new players which have come in. If you talk on a long-term perspective, that is something which is a short-term problem. As the market improves, that threat should disappear. Sorry. Hi.
I was saying, is it fair to assume to protect our margins, we've lost our market share in some pockets maybe?
We have not lost market share, but we have been, you can say, not being concerning like the other competitions where they have compromised on margins and have been totally focused on gaining volume. We have kind of maintained our volumes and also maintained our margins.
Fair. If you can just elaborate, what are we doing? Some points maybe you alluded to, but just protecting our dealer distribution or project-level clients. As the market improves, people are not seeing profitability. As they start seeing volumes and profitability, nothing stops them from expanding, right? Everyone has one plant, very little capacity, and they all have capital, private equity backing. Once the market improves, they will also start investing. When that scenario happens, how do we protect our market share and our dealers? What are we doing today to ensure that when they come aggressively, we don't lose market share at that time or we are not prone to the same discounting at that time also?
See, the capacity additions have, in fact, already happened. You find that most of the players which have come in, they have already started putting up their own plant. That is where the current situation has evolved because the capacity additions have come in at a point of time where the market has not grown. The capacity additions happened in anticipation of a growth in the market because post-COVID, there was a huge surge in the kind of demand which was there in the market. That prompted kind of capacity additions from both the incumbent players as well as the new players which had come in. Capacity additions have already happened. We don't anticipate further capacity additions to happen once the growth starts coming in, which has already happened. Once the growth is there, you'll find that the kind of situation which is prevailing right now will reverse.
Thank you very much. Niazar, may I request you to come back for a follow-up question, please?
Okay, fine. Thanks.
Thank you. Next question is from the line of Pranav Mehta from Equirus Securities. Please go ahead.
Yeah. Good morning, sir. Thank you for taking the question. Sir, I just needed to.
Pranav, sorry to interrupt. Make sure your audio is clear. Can you please speak through the headset?
Now it's clear?
Yeah.
Okay.
Yeah, sir, I wanted some clarity on the absolute numbers on the sanitaryware, faucetware, and tiles that you have done in this quarter and similarly correspondingly in Q1 too. Yeah, I just need the numbers.
For sanitaryware, I'll tell you the current quarter numbers first. In sanitaryware, the turnover was INR 208.67 crores. Faucetware was INR 161.85 crores. The wellness was INR 6.29 crores, and tiles was INR 42.61 crores. I'll just repeat the numbers. Sanitaryware, INR 208.67 crores. Faucetware, INR 161.85 crores. Wellness, INR 6.29 crores, and tiles, INR 42.61 crores. The corresponding number for Q1 FY2025 was sanitaryware, INR 209.23 crores. We are comparing INR 209.23 crores with INR 208.67 crores. INR 208.67 crores in the current quarter. This will be INR 209.23 crores in the previous quarter. It is more or less flat. Faucetware was INR 142.70 crores in the previous quarter. We are INR 161.85 crores in the current quarter. It's a growth of 13.4%. Wellness, INR 5.49 crores. Against that, we are INR 6.29 crores, 14.6% growth. Tiles was INR 40.59 crores.
We are INR 42.61 crores in the current quarter, growth of 5%.
Thank you. Next question is from the line of Girish Chaudhary from Avendus Capital. Please go ahead.
Yeah. Hi. Good morning. Firstly, on the capital allocation, I just wanted to check. I mean, last year, we did a buyback at close to INR 12,000 per share. If you look at the current price, it's almost 50% down. You also alluded that we have a very limited CapEx budget this year and then close to INR 800 crore of cash. Can we expect—are you thinking of implementing one more buyback? In general, how are you thinking about capital allocation?
We have seen steadily increasing our dividend payout. If you see, we were earlier paying something like INR 13 three, four years back. From that, we have come to INR 65 payout in the current year. Dividend has been steadily increasing. We expect that this kind of dividend, which we have been increasing in the past few years, should be steadily maintained and increased in the coming years also. In respect of buyback, as of now, it is uncertain. We don't have any plans right now. That can be only told to you once we both decide something in that respect, that we need, we're going to have a different, another buyback or something like that. As of now, we can talk about the dividend policy, which is, we can say, will be increasing in a steady manner.
Okay. Got it. Secondly, just on the market share and let's say the core sanitaryware business part, right? We are seeing the business decline. Despite a very low base, last year, also same quarter, we had a decline. You also mentioned that you have been maintaining volumes, but the absolute revenues are declining. How should one read this? Is this also due to a higher discounting which you're doing or also a function of lower price points? I understand the market is depressed. If you can help us understand this revenue decline.
The primary reason for the kind of decline which has happened in the sanitaryware sector is the market. You have to answer that question within your question itself. To give you a broad profile in respect of what is happening in the sanitaryware within Cera, if you talk about the kind of product profile which we had, let's say, four to five years back and the kind of product profile which we are having right now, that has undergone a complete change. Like earlier, if I go back three to four years back, the kind of products were basic. It was something that we used to sell in large volumes. Now, you'll find that we are moving more towards products which are higher value. We have internalized most of the items that we were importing from China that we have internalized and we have started manufacturing within our manufacturing facility.
The product profile has undergone a change. Now, you'll find that the sanitaryware market per se also is different from that of faucets in the sense that the life cycle of a sanitaryware product is very different from that of faucets. The replacement which happens happens at a much longer period as opposed to faucetware. There has been a kind of glut which has come into the sanitaryware market and within Cera. We have already started seeing trends which have now in the sense that there was no further decline in the current quarter. We anticipate that in the coming quarters also the trend should be reversing.
The specific question was, like you said, you maintained volumes, right? We are seeing revenue declines. At the same time, you're telling your positioning or you've seen premiumization. I mean, there is some disconnect there, right? I mean, is it a market share loss then?
That's what I'm trying to explain, that the kind of product profile that has happened in the case of sanitaryware is different from what we were having earlier. Earlier, it was smaller items, larger volumes at lower price points. Now, we have moved to lower volumes, higher price points. The pricing which is there with respect to competitors, they are obviously because you are in the market, you have to match the kind of prices which are being offered by the competition. More or less, we have maintained margins. The kind of profile has completely undergone the change within the sanitaryware system itself.
Okay. Have we also taken any discounts over the last one to two years?
The kind of discounts that we have taken, it had gone up by something like, you can say, 2% to 3% in the last six or seven quarters, which is now started on a stabilizing mode. We have not started reversing it, but it is not going down any further.
Got it. Fair enough. Thank you and all the best.
Thank you.
Thank you. Next question is from the line of Bhavin Rupani from Investec. Please go ahead.
Yeah. Hi, sir. Thank you so much for the opportunity. I had three questions. First is credit write-back. We have taken some credit write-back in FY2025 to the INR 234 crores we're at right now. Second question is on outsourcing mix.
Bhavin, sorry to interrupt you. Your audio is not clear. Can you please speak through the answer and repeat your question from the beginning, please?
Audible now?
Yes, you can hear me now, yes.
Yes. Sir, we have taken some credit right back in FY2025 to the tune of INR 34 crore. Can you just tell us what is the number in Q1? Second question is on outsourcing mix. Can you tell us what is outsourcing mix in faucetware and sanitaryware both? Third is on sanitaryware greenfield expansion. What is the status as of now?
Okay. I'll answer it in the reverse order. Sanitaryware greenfield expansion, we have already undertaken the purchase of land. The land acquisition has been completed, but the construction on the land has not yet started. We'll take a view by the end of the, you can say, current year. We don't anticipate the construction to start within this current year. By the end of the current year, we'll again take a review, and based on the review, the market conditions, how it has changed over the next six to nine months, we'll take a view whether we need to start construction by the end of the year. In respect of the outsourcing mix, I'll just tell you. In respect of sanitaryware, outsourcing was 57%. Manufacturing was 43%. In respect of faucetware, outsourcing was 48% and manufacturing was 52%. I'll repeat that again.
In sanitaryware, 57% and 43% for outsourcing and manufacturing respectively. For faucetware, 48% and 52% for outsourcing and manufacturing respectively. Coming to your first question, in respect of the credit right back, the credit right back were mostly on account of provisions that we had done in respect of the kind of sales discount, the turnover discounts which are given to the sales to our dealers. The discounts which are provided for are based on the estimate that the dealers will be meeting their targets. Once we found that the dealers are not meeting their targets, the actual discounts came out to be much lower than what we had provided for than what we had to arrive at in the previous year. In the current year, in the current quarter, I'll just tell you the figure, the amount of right back which has been there.
The right back has been to the extent of INR 2.73 crore compared to INR 6 crore in the previous quarter.
All right. Got it, sir. Thank you so much.
Thank you. Next question is from the line of Samyak Jain from Marcellus Investments . Please go ahead.
Good morning, sir. Sir, my only question is, our sanitaryware revenue in the quarter has been plateaued, whereas we have grown in our faucetware by 14%. Our project business has grown by 32% while we were in sales. Would it be fair to assume that the growth that we are getting in the project side is majorly from the faucetware instead of sanitaryware? Just wanted to know your thoughts on that.
The project business, it has grown by 32%. What you mentioned was that the kind of projects that we have won in the current quarter is higher by 32% as opposed to Q1 of the corresponding Q1 of the previous year. The sales will be cascading in the next few quarters. That gives you an idea about the kind of trend where it is moving for project allocation. Your question was that most of the utilities in the project have been from the faucetware side. I don't have that number ready with me right now. Maybe I can get back to you on that on an offline basis as to what kind of growth has happened in the faucetware and in the sanitaryware in respect of the project segment.
Sorry, sir. Directionally, what would be a bigger portion in the project sales?
I think the kind of proportion that we have for our overall numbers for companies would be through your faucet also for the project segment also.
Sure, sir. Got it. Thank you so much.
Thank you. Next question is from the line of Parikshit Gupta from Fair Value Capital, please go ahead.
Thank you very much for the opportunity. I just have one question. You mentioned that you already see signs of a turnaround of market demand. Can you please articulate which specific economic segment is it, the more mass premium segment or a relatively more premium luxe segment that you are seeing the recovery in? If you could also give this answer for both sanitaryware and faucetware, please.
Okay. Thank you. Regarding the revival of the recovery, as we have seen in the past, as far as the luxury segment is concerned, we have seen over the past few quarters that it is growing. That is why we are also coming up with our Sanitare brand and Cera Lux brand. That is one area which is growing. The area which was largely impacted was the mass premium category where the demand was sluggish and it is continuing so. What we are saying is that this segment is also now seeing some traction in terms of revival. Our expectation is that the numbers we have seen right now with respect to Q1, where we have achieved 5.4% YoY growth in respect of this mass premium segment, will further strengthen over a period of time.
Understood, sir. This is helpful. Thank you very much.
Thank you. Next question is from the line of Prakash Rupani from BOB CAPS. Please go ahead.
Hi. My name is Sir. My first question is on the margin side. If we see our EBITDA margin, which contracted on a YOY basis despite a weak base of last year, which got affected due to the general election, I wanted to understand whether the market condition was so depressed in the current June quarter that we are not able to pass on the commodity cost and inflation pressure to the consumer?
See, there have been no price increases in our sector for quite some time. We have not taken a price increase in sanitaryware for quite some time. In faucetware, we have taken a 6% price increase in the previous year, I think, sometime in September. If you're talking about price increases for that, we need to have a significant revival in the market. As I mentioned earlier, it has to come in from the competitors also, wherein everybody is then kind of pricing their products in a right manner. As of now, we are more intent on trying to maintain the margins which are there, which to be very specific, like if we talk about the current quarter, the gross margins are slightly down on account of the increase in the input prices. You can say that at the 1.5%, the gross margins have come down.
Apart from that, we have kind of been able to maintain the margins. The increase in cost, there has been a slight increase in the cost with respect to the employee cost. That is again on account of kind of annual increase which is happening on a regular basis. Typically, this year, the average increments to the staff was in the region of, you can say, 7.5% -1 0.5%. The staff cost roughly constitutes something like two-thirds of our total employee cost. That will be translating into something like, if you see on a quarter-on-quarter basis, Q4 to Q1, I think it will be translating to something like 6% - 6.5% increase in the cost. The costs, which are fixed in nature, have been increasing in the first quarter, it kind of results in a marked increase.
We are confident that going forward as the full year kind of goes by and we are having an increase in volume in the subsequent quarters, on the full year basis, we should be able to maintain that margin of 15% - 17%.
Okay. Sir, the last question is what is your credit write-back amount for the last addition? That is Q4 FY2025.
Q4 FY2025, I don't have the figure with me right now. Maybe I can give it to you again on an offline basis. The write-back you're talking in, in respect of Q4. The Q1 numbers I had already told you, like it was something like INR 2.73 crore. Because there has been a sharp fluctuation in your margin on a quarter-on-quarter basis, we just wanted to understand is it only because of the credit right back amount.
Part of it will be on account of that because the credit right back happened in one of the, I think, Q4, there was a subvention right back, if I remember correctly. That fluctuation will be there to that extent.
Okay, thanks a lot, sir.
Thank you very much. Ladies and gentlemen, due to time constraint, we'll take that as a last question. I'll hand the conference over to the management for closing comments.
Thank you, everyone, for attending this call and showing interest in Cera Sanitaryware Limited. Should you need any further clarification or would like to know more about the company, please feel free to reach out to me or to CDR India. Thank you once again for taking time to join the call. Thank you and bye.
Thank you very much. On behalf of CDR India, that concludes this conference. Thank you for joining us, and we now disconnect the lines.