Cera Sanitaryware Limited

Cera Sanitaryware reported a revenue from operations of ₹499 crore in Q3 FY26, marking an 11.1% year-on-year growth from ₹449 crore in Q3 FY25. However, profitability saw a significant decline, with EBITDA (without other income) falling to ₹51 crore from ₹59 crore in the prior year, resulting in a 300 bps compression of EBITDA margin to 10.2% from 13.2%. Profit after tax (PAT) also decreased substantially by 47.8% YoY to ₹24 crore from ₹46 crore, and EPS followed suit, dropping to ₹18.35 from ₹35.56.

The notable decline in margins was primarily attributed to an increase in trade discounts, particularly for project participation, and elevated brass input costs, which rose by approximately 12% in Q3 FY26. Additionally, higher publicity spend and pre-operating expenses for the new Senator and POLIPLUZ brands contributed to the pressure. To mitigate these impacts, the company announced calibrated price increases of 4% for Sanitaryware and 11% for Faucetware post-quarter, effective from March 1, 2026. Management expressed confidence that these price hikes would be sufficient to cover current cost increases.

The company continues to focus on strengthening its strategic foundation through sharper brand positioning and defined channel strategies. New brands, Senator and POLIPLUZ, are key levers for future growth. For Senator, 32 flagship stores are operational, with a focus on calibrated expansion. POLIPLUZ is in its investment and buildup phase, with distribution through 65 distributors and 750 dealers. Sales from these new brands for FY26 are now projected at ₹20 crore, revised down from an earlier ₹40-45 crore, with a target of ₹100-120 crore for FY27.

The real estate sector continues to show a healthy residential upcycle, supporting demand for higher-value products. Rural demand is also recovering meaningfully. Management noted early signs of modest improvement in underlying demand conditions across Faucetware and Sanitaryware. The 11.1% top-line growth in Q3 FY26 was attributed to actual demand improvement and company initiatives, rather than pre-buying ahead of price hikes. The company expects to maintain double-digit growth in Q4 FY26 and the coming financial year, aiming for an overall FY26 growth of 7-8%.

Capacity utilization stood at 102% for Faucetware and 82% for Sanitaryware during the quarter. The company's capital expenditure plan for FY26 was around ₹13.2 crore by December 2025, primarily for routine maintenance and selective investments in brand presence. While land for a new Sanitaryware facility has been purchased, construction has not commenced. The decision to proceed or defer construction will be reviewed at the end of Q4 FY26, based on market conditions and existing operational efficiencies that have increased production output within current plants.

Cera is advancing its dealer management program to improve visibility into secondary sales and channel inventory. The retailer loyalty program, currently manual, is planned to transition to a fully automated system once the dealer management system stabilizes, aiming to enhance efficiency and accuracy. The company continues to focus on disciplined cost management and operational efficiency across its supply chain and distribution to protect margins amidst input cost pressures and a mixed demand environment.