Cera Sanitaryware Limited — Q1 FY26 earnings call

Call held 7 Aug 2025

Management summary

Cera Sanitaryware reported a stable Q1 FY26 performance with a 5.4% YoY revenue growth to ₹419 crore, driven by strong Faucetware and B2B segment performance. However, EBITDA margins saw a slight contraction to 16.4% due to cost inflation and new brand investments. The company launched a new value brand 'POLIPLUZ' and continues to expand its premium 'Senator' brand, while navigating soft demand in the sanitaryware segment and competitive market conditions.

Highlights

  • Revenue from operations for Q1 FY26 stood at ₹419 crore, marking a 5.4% increase over ₹398 crore in Q1 FY25.

  • Faucetware segment recorded a year-on-year growth of 13.4% to ₹161.85 crore.

  • B2B segment continued to gain momentum, contributing 38% of revenues during the quarter, compared to 36% in Q1 FY25.

  • The project bank (orders won) registered a growth of 32% YoY in Q1 FY26.

  • Launched new value brand 'POLIPLUZ' targeting the deep value segment, expected to be margin-accretive with an EBITDA margin of 24-25%.

Concerns

  • EBITDA margin declined slightly to 16.4% from 17.5% in Q1 FY25, primarily due to inflation-driven cost increases and initial expenses for new brand launches.

  • Demand in the sanitaryware segment remained soft during the quarter, with revenues largely flat YoY at ₹208.67 crore.

  • Gas costs witnessed an increase, with the weighted average cost standing at ₹33.17 per cubic meter in Q1 FY26 compared to ₹31.64 in Q1 FY25.

  • Working capital increased YoY, with inventory days rising from 75 to 80 and receivables from 32 to 38 days.

  • Competitive discounting in the market due to overcapacity continues to pose a challenge to pricing.

Key financials

  1. Revenue from Operations ₹419 Cr +5.3%YoY
  2. EBITDA ₹72 Cr 0%YoY
  3. EBITDA Margin 16.4% -6.3%YoY
  4. Profit After Tax ₹47 Cr 0%YoY
  5. EPS ₹36.08 -0.08%YoY
  6. Cash & Equivalents ₹778 Cr

What they filed

Q1 FY27: revenue up 19.4%, net profit down 4.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue490 449 578 407 488 −0%499 +11%624 +8%486 +19%
EBITDA70 59 106 53 67 −4%51 −14%98 −8%49 −8%
Net profit68 46 86 47 57 −16%24 −48%77 −10%45 −4%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹419.42 Cr Total
  • Sanitaryware ₹208.67 Cr 49.8%
  • Faucetware ₹161.85 Cr 38.6%
  • Tiles ₹42.61 Cr 10.2%
  • Wellness ₹6.29 Cr 1.5%

Capital allocation

high confidence
  • Capex ₹23 Cr
    • Routine maintenance
    • Select investments towards brand building and expansion of retail footprints
    For FY26, we have marked a total Capex outlay of Rs. 23 crore. This includes routine maintenance as well as select investments towards brand building and expansion of our retail footprints.
  • Liquidity Cash ₹778 Cr
    As of June 30, 2025, our cash and cash equivalents stood at Rs. 778 crore.

Guidance & targets

Market Share

  • Market Outperformance Market Share · Long-term (once market recovers) · Medium confidence 6%-7%
    we remain focused on our earlier guidance that we will outperform the market by 6%-7%, based on the expectation that recovery in the segment will materialize.

    — Vikas Kothari

Revenue

  • Revenue Revenue · March '27 (FY27) · Low confidence ₹2,900 crore
    as far as the earlier targets which we have given with respect to reaching Rs. 2,900 crore by March '27, this was based on the assumption that the markets will perform and that future growth will depend on the sustained recovery in retail demand.

    — Vikas Kothari

  • POLIPLUZ Topline Revenue · Current year (FY26) · Medium confidence ₹25 crore to ₹30 crore
    the topline target for the current year would be kind of in the region of Rs. 25 crore to Rs. 30 crore because as of now we are still onboarding the team and the sales should be starting by let us say end of September, beginning of October.

    — Deepak Chaudhary

  • POLIPLUZ Topline as % of Total Turnover Revenue · End of three years · Medium confidence 5% to 7%
    by let us say end of three years we are targeting that it should be constituting something like 5% to 7% of our total turnover for the POLIPLUZ range.

    — Deepak Chaudhary

  • Revenue Growth Revenue · Full year FY26 · Medium confidence Higher single-digit or start of double-digit
    we expect that we will be ending with a higher single-digit number or maybe start of this double-digit number.

    — Vikas Kothari

Profitability

  • EBITDA Margin Profitability · Next two, three years · High confidence 15% to 17%
    We expect that the margins should be maintained at the region of 15% to 17% that we have been maintaining in the last few years.

    — Deepak Chaudhary

  • POLIPLUZ EBITDA Margin Profitability · N/A · High confidence 24% to 25%
    EBITDA margin should be in the range of 24% to 25% for this POLIPLUZ range that we are talking about.

    — Deepak Chaudhary

Distribution

  • Number of POLIPLUZ Distributors Distribution · End of one year · High confidence 140
    We aim to appoint 140 distributors with about 5,000 retail touchpoints by the end of one year

    — Deepak Chaudhary

  • Number of POLIPLUZ Retail Touchpoints Distribution · End of one year · High confidence 5,000

    — Deepak Chaudhary

  • Number of Senator Stores Operational Distribution · FY26 end · High confidence 45 to 50
    Our target is to operationalize around 45 to 50 stores by FY26 end.

    — Deepak Chaudhary

Costs

  • Staff Cost (Senator & POLIPLUZ) Costs · Annually (once full team onboard) · High confidence ₹13 crore to ₹15 crore
    We are projecting that the staff cost for Senator and POLIPLUZ, taken together, should be in the range of Rs. 13 crore to Rs. 15 crore per annum once the full team is onboard.

    — Deepak Chaudhary

Marketing

  • Publicity Budget (Senator & Luxe) Marketing · Annually (from next year onwards) · High confidence ₹11 crore to ₹12 crore
    Out of the Rs. 60 crore we typically spend annually on publicity, around Rs. 11 crore to Rs. 12 crore should be allocated to Senator and Luxe together.

    — Deepak Chaudhary

  • Publicity Budget (CERA Brand) Marketing · Annually (from next year onwards) · High confidence ₹35 crore to ₹40 crore
    Right. So, Rs. 11 to 12 crore for the Senator and Luxe brands, and the rest, Rs. 35 to 40 crore, would be for the CERA brand? Deepak Chaudhary: Correct. Okay.

    — Akash Shah

What to watch in Q2 FY26

Full Year FY26 Revenue Growth

Next quarter (for H1 update) and subsequent quarters
Current Q1 FY26 revenue growth 5.4% YoY
Target Higher single-digit or start of double-digit for FY26

Why it matters

This indicates the overall business health and the pace of market recovery, crucial for meeting long-term targets.

we expect that we will be ending with a higher single-digit number or maybe start of this double-digit number.

Risks & concerns

  • Soft Consumer Demand

    medium

    Continued softness in consumer demand across key markets impacting overall growth.

    Management acknowledged

  • Inflation-driven Cost Increases

    medium

    Inflationary pressures, particularly gas costs, led to a slight decline in EBITDA margins.

    Management acknowledged

  • Increased Working Capital

    medium

    Inventory days, receivables, and payables increased YoY, leading to higher net working capital.

    Management acknowledged

  • Competitive Discounting

    medium

    Competitors are offering higher discounts due to overcapacity, creating pricing pressure in the market.

    Management acknowledged

  • Uncertainty of Market Recovery Timing

    medium

    The timing of a broad-based market recovery remains uncertain, impacting the realization of growth targets.

    Management acknowledged

Q&A highlights

8 direct
Project Sales Margins and Micro-markets Direct
Yes. So, as far as the project business is concerned, definitely the margins are a little lower compared to retail. They are lower by 6%-7% on account of higher discounts being offered in the project category.

Provides specific margin impact of project sales compared to retail and clarifies that new premium brands are not yet significant in project sales.

Asked by Archana Gude

POLIPLUZ Pricing Strategy, Outsourcing, and Margins Direct
EBITDA margin should be in the range of 24% to 25% for this POLIPLUZ range that we are talking about. ... As of now it will be outsourced. Like the brass products, maybe some things will be in-house and some things will be outsourced, but the polymer parts will be completely outsourced.

Details the strategy for the new value brand, including its expected high margins despite outsourcing, and its target market.

Asked by Archana Gude

Rationale for Senator and POLIPLUZ Launches vs. Mid-range Performance Direct
The way we see it within the Company is that both Senator and POLIPLUZ are targeting a customer base which currently CERA is not targeting. POLIPLUZ is very different, going one level below the entry range that CERA has. ... Senator is targeting a more premium customer than CERA.

Clarifies the strategic positioning of the new brands, indicating they are for market expansion into underserved segments rather than bolstering existing ranges.

Asked by Praveen Sahay

Advertisement Expense for Q1 FY26 Direct
So, for the quarter, the advertisement expense was around Rs. 9.3 crore as compared to Rs. 11.4 crore in previous year's quarter. This differential, is due to a phasing impact as certain activities are planned in the subsequent quarters.

Provides specific ad spend figures and explains the YoY decline as a phasing issue rather than a reduction in overall marketing effort.

Asked by Praveen Sahay

Confirmation of Market Outperformance Guidance Direct
we remain focused on our earlier guidance that we will outperform the market by 6%-7%, based on the expectation that recovery in the segment will materialize.

Reaffirms long-term guidance despite current market challenges, linking it to an expected market recovery.

Asked by Praveen Sahay

Cost Impact of Senator and POLIPLUZ Brands on P&L Direct
We are projecting that the staff cost for Senator and POLIPLUZ, taken together, should be in the range of Rs. 13 crore to Rs. 15 crore per annum once the full team is onboard. ... around Rs. 11 crore to Rs. 12 crore should be allocated to Senator and Luxe together.

Quantifies the expected annual staff and publicity costs for the new strategic brands, providing insight into future P&L impact.

Asked by Akash Shah

Overall FY26 Topline Growth Outlook Direct
we expect that we will be ending with a higher single-digit number or maybe start of this double-digit number.

Provides a forward-looking revenue growth expectation for the full fiscal year, contingent on H2 market recovery.

Asked by Akash Shah

Competition and Market Share Loss Direct
We have not lost market share, but you can say, not been selling 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.

Addresses concerns about market share loss due to competitive discounting, asserting that CERA has maintained both volumes and margins.

Asked by Naysar Parikh

2 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

Cera Sanitaryware reported a 5.4% year-on-year increase in revenue from operations, reaching ₹419 crore in Q1 FY26, compared to ₹398 crore in Q1 FY25. Profit after tax remained stable at ₹47 crore. However, the EBITDA margin saw a slight contraction to 16.4% from 17.5% in the prior year, primarily due to inflation-driven cost increases and initial expenses associated with new brand launches. Working capital metrics also showed an increase YoY, with inventory days rising from 75 to 80 and receivables from 32 to 38 days.

Segmental Performance and Product Mix

The Faucetware segment was the strongest performer, recording a 13.4% YoY growth to ₹161.85 crore, supported by an expanded SKU portfolio. In contrast, the Sanitaryware segment's revenue remained largely flat at ₹208.67 crore, reflecting continued soft demand. The Tiles and Wellness segments also contributed positively with 5% and 14.6% YoY growth, respectively. From a product positioning perspective, 43% of sales came from the premium category, 35% from mid-segment, and 22% from entry-level products.

B2B Segment and Project Business Momentum

The B2B segment continued its growth trajectory, increasing its contribution to total revenues to 38% in Q1 FY26, up from 36% in Q1 FY25. This growth is attributed to healthy order inflows from the real estate sector, driven by increased construction activity and improved developer sentiment. The company's project bank, representing orders won, registered a significant 32% YoY growth in Q1 FY26, indicating strong visibility for future sales translation.

Strategic Brand Initiatives: Senator and POLIPLUZ

CERA is advancing its strategy for the premium 'Senator' brand, which now boasts expanded portfolios and a dedicated sales team. The target is to operationalize 45-50 exclusive Senator stores by FY26 end, with showroom displays upgraded to 650-800 sq ft. In parallel, the company successfully launched 'POLIPLUZ,' a new value brand targeting aspirational households in tier 4 cities and rural areas. POLIPLUZ is expected to achieve a topline of ₹25-30 crore in the current year and 5-7% of total turnover in three years, with an attractive EBITDA margin of 24-25%.

Market Outlook and Competitive Landscape

Management acknowledged the continued softness in consumer demand and increased competitive discounting in the market due to industry overcapacity. Despite these challenges, CERA stated it has maintained its volumes and margins, avoiding market share loss. The company remains optimistic about long-term industry prospects, supported by structural drivers and anticipates a market recovery in the second half of FY26, projecting a full-year FY26 revenue growth in the higher single-digit to double-digit range.

Capital Allocation and Cost Structure

As of June 30, 2025, CERA held ₹778 crore in cash and cash equivalents. The total Capex outlay for FY26 is planned at ₹23 crore, allocated for routine maintenance, brand building, and retail footprint expansion. Expected annual staff costs for the new Senator and POLIPLUZ brands are projected to be ₹13-15 crore, with an additional ₹11-12 crore allocated for Senator and Luxe publicity from next year, out of a typical annual publicity budget of ₹60 crore.

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