Cera Sanitaryware Q1 FY27 earnings call

Cera Sanitaryware Limited reported a strong start to FY27, with revenues growing by 19.5% year-on-year to ₹486 crore. This growth was predominantly volume-driven across core businesses. Both Sanitaryware and Faucetware segments delivered robust performance, contributing 47% and 40% of total revenues respectively, with YoY growth rates of 14% and 25%. The company observed healthy traction in the project segment and a gradual improvement in the retail business.

Despite strong revenue growth, EBITDA margins moderated to 10.1% in Q1 FY27, down from 13.1% in Q1 FY26. This compression was primarily due to one-time^📎 and transitional factors, including a ₹6.3 crore provision for long-term worker settlement, a ₹3.7 crore impact from reduced production due to single kiln operation, and a ₹4 crore impact from delayed reflection of price hikes in pre-booked project orders. Management expects these factors to be non-recurring^📎 beyond Q2 and maintains its full-year FY27 EBITDA margin guidance of 13.5-14%.

The company is investing significantly in brand building, with a planned outlay of approximately ₹85 crore for FY27, including a new integrated campaign featuring Kriti Sanon. This initiative aims to strengthen Cera's premium positioning and consumer connect. Concurrently, Cera is advancing its digital transformation by extending its Dealer Management System (DMS) to the retailer loyalty program, which is expected to enhance channel engagement, provide better visibility into secondary sales, and improve operational efficiency.

Cera has focused on operational efficiencies and strengthened its in-house manufacturing capabilities, progressively reducing dependence on the Morbi cluster by internalizing several key SKUs. This strategy ensures consistent product availability and effective catering to consumer demand. The company's approach involves manufacturing more complex SKUs in-house while outsourcing simpler ones, with the flexibility to internalize outsourced production if market conditions necessitate.

In Q1 FY27, Sanitaryware capacity utilization stood at 61%, affected by temporary single kiln operation, but both plants are now operating at approximately 80% utilization. Faucetware capacity utilization was high at 96%. The previously deferred greenfield sanitaryware expansion plan is under review, with a decision expected by the end of FY27, contingent on sustained demand. Increased Faucetware capacity is anticipated to come into effect from Q4 FY27.

Input costs, particularly gas and brass, remained elevated. Gas cost averaged ₹48.43 per cubic meter in Q1 FY27, a significant increase from ₹33.17 in Q1 FY26, and brass prices continued to rise, reaching ₹900. Cera implemented calibrated price revisions of 12% in Sanitaryware and 16% in Faucetware in March and May 2026. While these have been absorbed in the retail segment, their reflection in project business is delayed until Q3, and management is evaluating further price hikes if raw material costs continue to escalate.

The company demonstrated significant improvement in working capital management, with the net working capital cycle improving from 75 days to 50 days year-on-year. This was driven by a reduction in inventory days from 80 to 68 and receivables from 38 to 30 days, alongside an increase in payables from 43 to 48 days. As of June 30, 2026, Cera Sanitaryware maintained a strong liquidity position with Cash and Cash Equivalents totaling ₹943 crore.