Concall AI

Pokarna Limited — Q1 FY26 earnings call

Call held 1 Aug 2025

Management summary

Pokarna Limited faced a challenging Q1 FY26 marked by significant uncertainty surrounding U.S. tariffs, which led to demand constraints and a slowdown in orders. While the company anticipates short-term 'pain' due to the new 25% tariff, it remains committed to its long-term growth strategy, including a new capacity expansion projected to add ₹500 crore in turnover by FY27, and the launch of innovative KREOS and Chromia product lines this fiscal year. Management is actively diversifying its geographic footprint and strengthening its domestic presence to mitigate U.S. market dependence.

Highlights

Commitment to new capacity expansion, expected to add ₹500 crore additional turnover upon full utilization by FY27.
Launch of KREOS and Chromia lines expected to begin contributing this fiscal year, strengthening product mix.
Active geographic diversification strategy, with non-US revenues gradually increasing.
Opening of an Experience Center in Hyderabad within 6 months to boost domestic presence.
Management's confidence in navigating uncertainties with a resilient business model and agile strategy.

Concerns

Significant uncertainty and demand constraint due to new 25% U.S. tariffs, expected to cause 'pain' in the current quarter.
Anticipated elevated input and distribution expenditures due to tariffs.
Customer deferral of large-scale home improvement projects in the U.S.
Pricing will be under strain, requiring adjustments with customers.

What they filed

Q1 FY27: revenue up 10.5%, net profit up 53.6% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	251	224	263	171	118 −53%	135 −40%	147 −44%	189 +11%
Expenses	165	146	162	116	95	94	102	121
EBITDA	86	78	101	55	24 −72%	41 −47%	45 −55%	68 +24%
Margin	34%	35%	38%	32%	20%	30%	31%	36%
Other income	2	11	3	3	7	7	8	6
Interest	9	9	10	8	9	8	5	5
Depreciation	11	11	12	12	12	12	12	12
Profit before tax	69	69	82	38	10 −86%	28 −59%	35 −57%	57 +50%
Tax rate	34%	27%	29%	25%	36%	27%	28%	26%
Net profit	45	51	59	28	6 −87%	20 −61%	26 −56%	43 +54%
EPS	14.50	16.32	19.00	9.12	2.04	6.57	8.26	13.74

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.

Guidance & targets

Capacity

Additional Turnover from New Capacity Capacity · FY27 beginning (upon full utilization) · High confidence ₹500 crore

Yes, that when we are fully functional and full optimum utilization, we will add an additional turnover of about Rs. 500 crore.

— Gautam Chand Jain
New Expansion Production Start Capacity · FY27 · High confidence FY27 beginning

But this production from the new expansion will come in the financial year ending '26-'27, the beginning '27.

— Gautam Chand Jain

Distribution Reach

Experience Center Opening Distribution Reach · Within 6 months · High confidence Within 6 months

We expect to be opening this Experience Center in another 6 months' time

— Gautam Chand Jain

Product Mix

KREOS line contribution Product Mix · This fiscal year (FY26) · High confidence Begin contributing

we expect the KREOS line to begin contributing from this fiscal year as we roll out a range of design-led premium offerings.

— Gautam Chand Jain
Chromia line initial contributions Product Mix · This year (FY26) · High confidence Initial contributions

We also anticipate initial contributions from Chromia line during this year, with a more material impact expected over subsequent periods.

— Gautam Chand Jain

What to watch in Q2 FY26

Impact of 25% US Tariff on Volumes/Pricing

Next quarter (Q2 FY26)

Current 10% tariff for Q1, 25% effective Aug 7, 2025. Management expects 'pain' in current quarter.

Target Stabilization of demand and pricing post-tariff absorption.

Why it matters

Direct impact on revenue and profitability, key uncertainty.

So, I see that there will be a pain we will have during this particular quarter. But then, if tariffs are finalized, the business should happen as usual.

Risks & concerns

Tariff Uncertainty & Demand Constraint
high

Uncertainty around U.S. tariff announcement continues to constrain demand, disrupting the value chain, with a new 25% tariff effective from Aug 7, 2025, expected to cause 'pain' in the current quarter.

Management acknowledged
Slowdown in Orders due to Tariff Uncertainty (Q1 FY26)
high

Slowdown in new orders from April onwards due to uncertainty about tariffs, leading to expected 'pain' in the current quarter.

Management acknowledged
Elevated Input & Distribution Expenditures
medium

Imposition of tariffs on building materials and engineered stone is anticipated to result in elevated input and distribution expenditures.

Management acknowledged
Customer Deferral of Home Improvement Projects
medium

Customers in the U.S. are deferring large-scale home improvement projects (kitchens, bath remodeling) in favor of lower-cost options.

Management acknowledged

Q&A highlights

2 direct, 1 evasive

Impact of tariffs on realization and margins Partial

Overall, I assume that we will definitely have some adjustment in the pricing with our customers. But today it is too early to suggest what could it be.

Analyst sought clarity on the financial impact of new tariffs on profitability, a key concern for the sector.

Asked by Viraj Mehta

Facility utilization for the quarter Evasive

See, normally, as you know, we don't share utilization of units... So, I don't think we will be able to give you that answer right now.

Management declined to provide specific operational efficiency metrics, which analysts use to gauge capacity utilization and demand.

Asked by Viraj Mehta

Average tariff rate for Q1 and pass-on strategy Partial

Right now, the tariff rate during Quarter 1, which is not yet paid by the customer, would be 10% for the containers reaching now, during this 90 days period. Post that, now it will become 25%. But just for information, we don't share any tariffs yet.

Direct question on the immediate financial impact of tariffs and how the company is managing it, which is a major operational challenge.

Asked by Shikhar Mundra

Estimated fall in volumes due to 25% tariff Partial

By the time customers absorb these tariffs, they will also compare with other countries what are the tariffs and parallel products available? So, I think we are coming into this situation for the first time, and we will have to wait how customers react and whatever negotiations, we will have to continue with the customers...

Addresses the potential demand shock and volume decline expected from the increased tariff rates.

Asked by Shikhar Mundra

Maintaining margins with new products amidst tariff uncertainty Partial

See, that is the focus that we will continue with the margins because we have focused on giving the market a better quality of product with more innovations. And when we do that, we really anticipate that the margins we will hold, but it will depend on the order that we get post-tariff.

Analyst probed the sustainability of margins with new product launches in the context of tariff pressures.

Asked by Hrishikesh Bhagat

Possibility of staggering new project due to tariff uncertainty Direct

I don't think we can defer. And I don't think we have to defer our plans because of just a tariff issue in one market. Our ultimate goal is to keep raising our revenues, increasing our profits, and find other opportunities to penetrate in other markets.

Clarifies management's firm commitment to expansion plans despite market headwinds, indicating a long-term growth focus.

Asked by VK Karthikeyan

Product mix strategy for the new facility Partial

See, this is a business strategy that we need to take a call from time to time, again, customer to customer... So, in the new machines, we have the capability to make thinner slabs. We have the capability, which I can proudly tell you that no other quartz company in the world has, because we have KREOS and we have Chromia.

Provides insight into how the new capacity will be utilized to produce differentiated products like thinner slabs, KREOS, and Chromia, aligning with innovation strategy.

Asked by VK Karthikeyan

Impact of Mr. Paras's resignation on the business Direct

But we have enough team to continue the business. I myself have started this business, and I continued to be actively participating in the day-to-day working of the organization. In addition to me, my son, Mr. Rahul, is the Managing Director who is full-time involved to take forward whatever work Paras was taking care of.

Addresses concerns about leadership continuity and operational stability following a key executive's departure.

Asked by Sonaal Kohli

2 min read 7 chapters

Detailed narrative

Business Environment and Tariff Impact

The business environment remains challenging due to uncertainty around U.S. tariffs, which constrains demand and disrupts the value chain. Management anticipates this uncertainty to persist until a definitive tariff resolution is reached. The 25% tariff on Indian quartz surfaces became effective on August 7, 2025, following a 10% tariff period in Q1 FY26. This is expected to lead to elevated input and distribution expenditures and put pricing under strain, with management anticipating 'pain' in the current quarter due to a slowdown in orders since April.

Strategic Response to Tariffs and Market Diversification

Despite tariff challenges, Pokarna views this as a strategic opportunity to broaden its market presence and deepen engagement with economically aligned countries. Demand from non-US markets like Czech Republic, Canada, France, Mexico, and Russia is encouraging and gradually increasing. The company is actively diversifying its geographic mix to reduce dependence on the U.S. market.

New Product Development and Innovation

Pokarna is strengthening its product mix with the KREOS and Chromia lines, which are expected to begin contributing this fiscal year. The new collection of KREOS and Chromia will be launched at a forthcoming show in Italy in September. These advanced technologies are aimed at elevating the product portfolio and reinforcing Pokarna's position as a product innovator in the global quartz surface industry.

Capacity Expansion Plans

The company is proceeding with its new capacity expansion, with orders for machines already placed and construction initiated. Production from this new expansion is anticipated to commence in the financial year ending '26-'27, adding an additional turnover of approximately ₹500 crore upon full utilization. Management has stated that deferring these expansion plans is not feasible due to existing commitments and the long-term goal of revenue growth across markets.

Domestic Market Expansion

On the domestic front, Pokarna is focused on expanding its footprint, with a key initiative being the opening of an Experience Center in Hyderabad within the next six months. This center will serve to strengthen brand visibility, enhance customer engagement in the Indian market, and attract foreign visitors.

Customer Engagement and Pricing Strategy

Management acknowledges that pricing adjustments will be necessary with customers due to the new tariffs, but specific details are yet to be determined as the situation evolves. The company emphasizes its customer-friendly approach, aiming to retain customers and provide innovative products that others cannot. They will revisit pricing, color palettes, and product offerings to adapt to the new market conditions.

Management Team and Continuity

The company addressed the exit of its former Company Secretary, Mr. Paras, assuring stakeholders that there is a strong team in place to ensure business continuity. The Chairman and Managing Director, Mr. Gautam Chand Jain, along with his son, Mr. Rahul Jain (Managing Director), are actively involved in the day-to-day operations and strategic direction of the quartz business.

This is an AI-generated summary of a publicly available earnings call transcript.

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