Cera Sanitaryware Limited — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Cera Sanitaryware reported a largely flat Q2 FY26 revenue of INR 488 crore, with a slight dip in EBITDA and PAT primarily due to input costs and prior year's one-time tax gain. While retail demand remained subdued, the company saw healthy traction in project sales (39% of topline) and 1.4% growth in its Sanitaryware segment. Strategic initiatives like DMS rollout and new brand development (Senator, Polipluz) are progressing, with management cautiously optimistic for H2 FY26 recovery and full-year growth of 7-8%.

Highlights

  • Sanitaryware segment delivered a year-on-year growth of 1.4% in Q2 FY26, supported by stable demand and continued traction in the product portfolio.

  • Project sales accounted for 39% of the topline in Q2 FY26, demonstrating healthy traction from the real estate sector.

  • New product launches contributed about 33% of the overall sales, reflecting a continued focus on portfolio contemporariness.

  • Successfully divested two LLPs, generating a profit on divestment of INR 5.54 crore, streamlining the portfolio.

  • Cash and cash equivalents stood at INR 736 crore as of September 30, 2025, indicating strong liquidity.

Concerns

  • Q2 FY26 revenue from operations remained largely flat at INR 488 crore, a slight decline from INR 490 crore in Q2 FY25.

  • EBITDA (without other income) decreased to INR 67 crore in Q2 FY26 from INR 70 crore in Q2 FY25, with EBITDA margin declining from 14.2% to 13.8% due to increased input costs.

  • Profit after tax for Q2 FY26 was INR 57 crore, lower than INR 68 crore in Q2 FY25, primarily due to a one-time deferred tax income recognized in the previous year.

  • Retail demand remained subdued, impacting overall growth, though the pace of contraction moderated.

Key financials

2 periods

Headline

  • Revenue from Operations
    ₹488 Cr
    YoY -0.41%
  • EBITDA (without other income)
    ₹67 Cr
    YoY -4.3%
  • EBITDA Margin
    13.8%
  • Profit After Tax
    ₹57 Cr
    YoY -16.2%
  • EPS
    ₹43.92
  • Cash and Cash Equivalents
    ₹736 Cr

H1

  • Net Revenues
    ₹907 Cr
    YoY +2.2%
  • EBITDA (without other income)
    ₹120 Cr
    YoY -4.8%
  • Profit After Tax
    ₹103 Cr
    YoY -10.4%

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

  • Sanitaryware (Q2 FY26)
    47% Revenue Contribution1.4% YoY Growth
  • Faucetware (Q2 FY26)
    40% Revenue Contribution-3.5% YoY Growth
  • Tiles (Q2 FY26)
    11% Revenue Contribution3.1% YoY Growth
  • Wellness (Q2 FY26)
    2% Revenue Contribution3.2% YoY Growth
  • Sanitaryware (H1 FY26)
    0.58% YoY Growth
  • Faucetware (H1 FY26)
    3.5% YoY Growth
  • Wellness (H1 FY26)
    8.2% YoY Growth
  • Tiles (H1 FY26)
    4% YoY Growth

Capital allocation

high confidence
  • Capex ₹23 Cr
    • Routine maintenance
    • Strengthen brand presence
    • Expand retail footprint
    For financial year '26, we have earmarked a capex outlay of around INR 23 crore. This primarily covers the routine maintenance requirements, along with focused investments to strengthen our brand presence and expand our retail footprint.
  • M&A Race Polymer Arts LLP and Packcart Packaging LLP Divestment · Closed · Consideration ₹[object Object] (undisclosed)

    Relatively lower business magnitude and limited strategic relevance, focus on core business activities.

    Profit on divestment of INR 5.54 crore, forms part of Q2 other income.

    So Praveen, thank you very much for asking the question. Just to update, as we have already given our financials also, the Company has divested its stake in two subsidiary LLPs i.e Race Polymers Arts LLP and Packcart Packaging LLP. This is owing to the relatively lower business magnitude and limited strategic relevance, and with respect to the focus that we want to develop in our core business activities. So that was the event which occurred in Q2 before the closure of Q2. And regarding the deal which was completed, the total consideration we have received for these two LLPs is what you have rightly told is INR 18.75 crore. And we have recorded the profit on divestment of INR 5.54 crore, which forms part of this Q2 and is in other income.
  • Liquidity Cash ₹736 Cr
    As of 30th September '25, our cash and cash equivalents stood at INR 736 crore.

Guidance & targets

Revenue

  • Full Year FY26 Growth Revenue · FY26 · High confidence 7-8%
    So that for the full year, we should end up at something like 7% to 8% growth for the full year.

    — Deepak Chaudhary

  • H2 FY26 Growth Revenue · H2 FY26 · High confidence 10-12%
    Like we have done 2% in H1, we anticipate that H2 will be improving with all the macroeconomic factors being positive. So we anticipate that we should be ending H2 with something like 10% to 12% of a growth number.

    — Deepak Chaudhary

  • Faucetware Full Year Growth Revenue · FY26 · High confidence 8-10%
    So our understanding is that the growth, which is going to be there will come in H2, and we will definitely be able to see better months coming in the H2. [Context: Faucetware again is growing at a speed of 8% to 10%.]

    — Vikas Kothari

  • Senator and Polipluz Combined Turnover Revenue · FY26 · High confidence INR 40-45 crore
    We anticipate that we should be ending the year with both these brands at something in the region of INR 40 crore to INR 45 crore.

    — Deepak Chaudhary

  • Senator and Polipluz Combined Turnover Revenue · FY27 · High confidence INR 150 crore
    The kind of volumes and the numbers that we have projected for the next 2 years, like this should be contributing to something like INR 150 crore of turnover from Senator and Polipluz taken together.

    — Deepak Chaudhary

Profitability

  • Operating Margin Profitability · FY26 · High confidence 14.5-15%
    Operating margin should be remaining at that region of 14.5% to 15% that we are seeing right now.

    — Deepak Chaudhary

  • Senator Margin Profile Profitability · Long-term · High confidence 20-22%
    In respect of the margin profile, like Senator will have slightly higher margins as opposed to the kind of mix that we are having right now. We expect that it should have margins to the tune of 20% to 22%.

    — Deepak Chaudhary

  • Polipluz Margin Profile Profitability · Long-term · High confidence ~25%
    Polipluz, we expect it to be slightly higher. It should be in the range of 25%.

    — Deepak Chaudhary

Costs

  • Employee Cost Inflation (Full Year) Costs · FY26 · High confidence 7-8%
    So that should take it for the whole year to be in the range of, let us say, 7% to 8%, if that happens in this year.

    — Deepak Chaudhary

What to watch in Q3 FY26

Full Year FY26 Revenue Growth

FY26
Current H1 FY26 at 2.2%
Target 7-8%

Why it matters

Verifies management's confidence in H2 recovery to meet full-year growth targets.

So that for the full year, we should end up at something like 7% to 8% growth for the full year.

Risks & concerns

  • Subdued retail demand

    medium

    In the backdrop of demand environment that remains subdued, particularly on the retail side, we are pleased to report a steady performance this quarter.

    Management acknowledged

  • Increase in input costs (brass prices)

    medium

    EBITDA margin slightly declined from 14.2% in Q2 FY '25 to 13.8% in Q2 FY '26, primarily due to increase in input costs... The metal price, the brass price has again taken a sharp increase.

    Management acknowledged

  • Competition in Sanitaryware segment

    low

    In the sanitaryware category, the competition is quite high, and we see that an entrant who has been restricted to Faucetware has actually started getting traction in sanitaryware.

    Analyst acknowledged

Q&A highlights

7 direct
Full year FY26 growth guidance vs H1 performance Direct
So that for the full year, we should end up at something like 7% to 8% growth for the full year.

Clarifies the revised full-year growth expectation given a slower H1, indicating confidence in H2 recovery.

Asked by Archana Gude

Impact of divestment on Q2 PAT and recurring profit Direct
And we have recorded the profit on divestment of INR 5.54 crore, which forms part of this Q2 and is in other income.

Provides clarity on the one-time nature of a portion of the reported PAT, helping investors understand the underlying operational profitability.

Asked by Praveen Sahay

Project business contribution and its future trajectory Partial
Praveen, it is very difficult to say, because whether the project size would as a proportion of the total business would be growing or not. Essentially, that is totally dependent upon how the demand revives.

Highlights the dependency of the project segment's proportion on retail demand recovery, indicating a flexible strategy rather than a fixed target for project contribution.

Asked by Praveen Sahay

Specific macro factors driving H2 demand recovery Direct
But we see very positive signs in macro environment like the interest rates are stable, steady GDP growth is there, increased Government spending on housing and infrastructure and the recent rollout of GST 2.0, which simplifies the tax framework.

Details the specific macroeconomic tailwinds management expects to drive H2 growth, providing a basis for their optimism.

Asked by Archana Gude

Input cost inflation (brass prices) and potential price hikes Direct
The metal price, the brass price has again taken a sharp increase. It is beyond INR 600, roughly around INR 620 or INR 630. So that is one factor which has impacted the margins, and the profitability... But right now, there is no such plan [for price hikes].

Identifies a key margin headwind (brass prices) and management's current stance on not immediately passing it on, indicating potential continued margin pressure if costs persist.

Asked by Resha Mehta

Marketing spend and profitability for new brands (Senator, Polipluz) Direct
The total spend that we intend to do would be carved out of the total budget that we have. We expect it to be in the range of INR 10 crore to INR 12 crore. From next year onwards, you will find that, that amount would increase, both for Senator as well as for the Polipluz also.

Provides initial investment figures for new brand development and future margin expectations, crucial for assessing the long-term potential of these strategic initiatives.

Asked by Karan Bhatelia

Competition in the premium sanitaryware segment and Cera's strategy Direct
So that is the idea that we have come out with that brand Senator, which is targeted towards the market, which is as of now showing traction.

Explains the rationale behind launching Senator to address a specific luxury/metro market segment where Cera previously lacked strong presence, indicating a targeted approach to premiumization.

Asked by Syed Nawaz

Specific areas of cost optimization Direct
One area where we have really tried to extract more value and not increase is the publicity spend... Second area has been the kind of efficiencies which we have been able to get within the plant.

Provides concrete examples of where the company is achieving cost efficiencies (marketing spend, plant operations/rejection rates), rather than just a generic statement.

Asked by Jaspreet Arora

2 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

Cera Sanitaryware reported Q2 FY26 revenue from operations at INR 488 crore, a marginal decline from INR 490 crore in Q2 FY25. EBITDA (without other income) stood at INR 67 crore, down from INR 70 crore YoY, resulting in a margin compression from 14.2% to 13.8% primarily due to increased input costs. Profit after tax was INR 57 crore, lower than INR 68 crore in the prior year, which included a one-time deferred tax income. EPS for the quarter was INR 43.92.

Segmental Performance and Contribution

In Q2 FY26, Sanitaryware contributed 47% to revenue, growing 1.4% YoY, while Faucetware accounted for 40% but saw a 3.5% YoY decline due to a high base effect from prior year's price increases. Tiles and Wellness segments grew 3.1% and 3.2% respectively. Project sales remained a strong pillar, contributing 39% to the topline, driven by steady order inflows from the real estate sector. For H1 FY26, net revenues increased by 2.2% to INR 907 crore.

Market Demand & Macro Outlook

The retail demand environment remained subdued in Q2 FY26, though the pace of contraction in the Sanitaryware segment moderated. Management expressed cautious optimism for H2 FY26, citing positive macroeconomic factors such as stable interest rates, steady GDP growth, increased government spending on housing and infrastructure, and the recent rollout of GST 2.0. They anticipate H2 growth of 10-12%, leading to a full-year growth of 7-8%.

Strategic Initiatives and Brand Expansion

Cera is strengthening its strategic foundation through brand segmentation and channel strategies. The rollout of a Dealer Management System (DMS) has onboarded approximately 200 dealers, enhancing data visibility. New premium brand Senator aims for 45-50 stores by FY26 (28 operational), while deep-value brand Polipluz is expanding its network to 38 distributors and 650 dealers, targeting 100 distributors and 2,000 dealers by March 2026. These new brands are projected to contribute INR 40-45 crore to turnover by FY26 and approximately INR 150 crore by FY27.

Capital Allocation and Cost Management

The company has earmarked a capex outlay of approximately INR 23 crore for FY26, primarily for routine maintenance, brand presence, and retail footprint expansion. During the quarter, Cera divested two LLPs, Race Polymer Arts LLP and Packcart Packaging LLP, for a total consideration of INR 18.75 crore, realizing a profit of INR 5.54 crore which was included in Q2 other income. Management emphasized ongoing cost optimization programs and operational efficiencies, particularly in publicity spend and plant operations (reducing rejections), to mitigate input cost pressures.

Input Costs and Margin Outlook

EBITDA margin declined to 13.8% in Q2 FY26 from 14.2% YoY, mainly due to increased input costs, particularly a sharp rise in brass prices to INR 620-630/kg. Gas costs, however, saw a slight decrease. Despite the cost pressures, management aims to maintain operating margins in the 14.5-15% range for the full year, banking on improved volumes in H2 and continued cost efficiencies. No immediate price hikes are planned, but a decision may be considered if brass prices continue to rise.

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