Somany Ceramics Limited — Q3 FY26 earnings call

Call held 28 Jan 2026

Management summary

Somany Ceramics reported a strong Q3 FY26 with 6% sales growth and significant margin expansion, leading to a doubling of PAT. The company successfully reduced its debt and is optimistic about reducing losses from its JV, Somany Max, in the coming quarters. Management highlighted improving domestic demand and stable gas prices, while also addressing the impact of rising brass costs on bath fittings pricing.

Highlights

  • Consolidated sales grew 6% to INR677 crores in Q3 FY26.

  • EBITDA grew 16% to INR62 crores, with EBITDA margin improving by 80 bps to 9.2%.

  • PAT almost doubled from INR9 crores to INR18 crores.

  • Total outside debt reduced significantly from INR288 crores to INR231 crores.

  • Domestic demand showed gradual improvement, with increased offtake from the building sector and easing oversupply.

Concerns

  • JV loss from Somany Max due to lower capacity utilization continues, though steps are being taken to mitigate it.

  • Volume growth remains muted despite signs of improving domestic demand.

Key financials

  1. Consolidated Sales ₹677 Cr +6%YoY
  2. EBITDA ₹62 Cr +16%YoY
  3. EBITDA Margin 9.2% +0.8%QoQ
  4. PBT ₹25 Cr +28%YoY
  5. PAT ₹18 Cr +100%YoY

What they filed

Q1 FY27: revenue up 18.9%, net profit up 105.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue642 623 743 582 658 +2%647 +4%753 +1%692 +19%
EBITDA32 32 47 35 41 +28%44 +38%63 +34%61 +74%
Net profit18 23 28 17 23 +28%22 −4%37 +32%35 +106%
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

  • Adhesive and Waterproofing
    35% Growth
  • Tiles
    3.6% Growth83.5% Share of Overall Business
  • GVT Segment
    0.04 yoy_improvement Improvement42% Share of GVT

Capital allocation

high confidence
  • Debt Gross ₹231 Cr Maturity: Majority of INR121 crores term loan to be paid in next 3 years.
    Our total outside debt, which was INR288 crores at the beginning of the year, reduces to INR231 crores now. Of this, INR121 crores is the term loan and working capital is at INR95 crores. Predominantly, this is in 2 entities, Sudha and Max. The term loan of INR121 crores gets paid majority in next 3 years. By '29, we'll pay majority of this debt. And on the Max front, the plant is getting stabilized. The losses, which was around INR7.5 crores in previous 2 quarters have reduced to INR6 crores on account of improvement in capacity utilization. Quarter 4, we should see these losses coming down substantially. What we pay in this year is around INR9 crores, and we pay around INR70 crores in FY '27 and '28. So, this number will come down to around INR50 crores at the end of FY '28.

Guidance & targets

EBITDA Margin

  • EBITDA margin improvement EBITDA Margin · Q4 FY26 · High confidence 1% to 1.5%
    We remain with the same guidance of a decent single-digit growth for the year and EBITDA margin should improve by 1%, 1.5% in Q4 FY '26.

    — Abhishek Somany

JV Performance

  • Max plant losses reduction JV Performance · FY27 · High confidence below INR10 crores

    From INR25-26 crores today

    In FY '27, we had said that the losses from INR25 crores, INR26 crores will be down to below INR10 crores, and we continue with that guideline, and we will demonstrate that from a moving average in quarter 4 itself. So you would be able to extrapolate what that would be next year.

    — Abhishek Somany

  • Max plant profitability JV Performance · FY27-28 · High confidence profit situation
    And next year, '27, '28, this would be in a profit situation.

    — Abhishek Somany

Ad Spend

  • Ad spend as percentage of sales Ad Spend · ongoing · High confidence 2.5%
    But otherwise, every other thing has been maintained, and this will remain at that 2.5% of sales.

    — Abhishek Somany

Debt

  • Total outside debt Debt · end of FY28 · High confidence around INR50 crores

    From INR231 crores today

    What we pay in this year is around INR9 crores, and we pay around INR70 crores in FY '27 and '28. So, this number will come down to around INR50 crores at the end of FY '28.

    — Sailesh Kedawat

Depreciation

  • Quarterly depreciation run rate Depreciation · ongoing · High confidence INR26-27 crores
    Yes, yes. This is going to be a run rate. It's going to be between INR26 crores, INR27 crores.

    — Sailesh Kedawat

What to watch in Q4 FY26

Max plant loss reduction

Q4 FY26
Current INR6 crores loss in Q3 FY26
Target Substantial reduction in losses

Why it matters

Reduction in JV losses is key to improving overall profitability and EBITDA.

Quarter 4, we should see these losses coming down substantially.

Risks & concerns

  • JV losses from Somany Max

    medium

    Lower capacity utilization at Somany Max is causing losses, which were INR6 crores this quarter, down from INR7.5 crores in previous quarters.

    Management acknowledged

  • Muted volume growth in domestic market

    medium

    Despite signs of improving domestic demand, volume growth remains on the muted side.

    Analyst acknowledged

  • Brass cost inflation

    medium

    Brass costs have increased by 22-23% (from INR570-580/kg to INR770-780/kg), driving price hikes in bath fittings.

    Analyst acknowledged

Q&A highlights

6 direct
Domestic demand outlook Direct
Yes. There is a light at the end of the tunnel. We're seeing better walk-ins in the market recently and also spoken to many dealers. So there's been an improved walk-in. So there is clearly a light at the end of the tunnel.

Analyst sought clarity on the domestic market's recovery, and management confirmed positive signs of improvement in walk-ins and dealer sentiment.

Asked by Sneha Talreja

Projects market demand and sales mix Direct
So retail still is a significant portion, and it will remain so, although the project is increasing, but projects don't increase overnight. It's a whole cycle of getting it approved in sample flats and then the material going in the projects over the next 2 years. So currently, our retail is approximately 77% -- 77%, 78%. And this probably in the next year would be -- you would be looking at about 75%, which means that the private project would go up and also the government would go up a little bit.

Clarified the current retail vs. project sales mix and the expected shift towards projects in the coming year, indicating a gradual but steady increase in project contribution.

Asked by Sneha Talreja

Debt repayment schedule and future debt levels Direct
The outside debt today is INR231 crores. What we pay in this year is around INR9 crores, and we pay around INR70 crores in FY '27 and '28. So, this number will come down to around INR50 crores at the end of FY '28.

Provided a clear roadmap for debt reduction, projecting a significant decrease in total outside debt by FY28, which is a positive for financial health.

Asked by Sneha Talreja

Max plant breakeven and loss reduction timeline Direct
Hopefully, 18 months from today, but we will be able to reduce the loss of INR26 crores, INR27 crores this year to less than INR10 crores for next year for sure. So that itself will add to EBITDA. And this is -- I'm talking which is something which is absolutely given. We would try to achieve better than that. And next year, '27, '28, this would be in a profit situation.

Addressed concerns about the Max plant's losses, providing specific targets for loss reduction in FY27 and a timeline for achieving profitability, which is crucial for overall company performance.

Asked by Keshav B. Lahoti

Gas and propane fuel mix and average price Direct
INR44. This does not -- this is only gas pricing. This does not include anything which we do on the biogas. So some of the industry people report it as a consolidated price where they mix up the biofuel and the natural gas pricing. What I'm giving you is only the gaseous fuel, which is our South plant, West plant and North plant, which we get from GAIL, GSPC and IOC.

Clarified the company's diversified fuel mix across different plants and provided an average gaseous fuel price, which is important for understanding cost structures and margin stability.

Asked by Rahul Agarwal

Price hikes in bath fittings due to brass cost Direct
Yes, Shrivatsa here. Yes, it's largely driven by the brass cost. Yes. So I mean, if I give you an idea, in April, we were buying brass at around INR570, INR580 per kg. Now we are doing INR780, INR770, so about 22%, 23%...

Confirmed that price increases in bath fittings are directly linked to a significant rise in brass costs, indicating a pass-through mechanism for raw material inflation.

Asked by Rahul Agarwal

Impact of EU-India FDA deal and China VAT reduction on exports Partial
So first of all, the EU deal will take more than a year to come to light. Let's see what happens. It's too early. It's just an announcement. Nothing really known on that. But I think the volume which has grown up grown in Morbi from INR16,500 crores to INR1,000 crores to about INR19,000 crores, INR19,500 crores this year of export. That is clearly benefiting the Morbi industry. Secondly, I think what will benefit more and is likely to happen faster than the EU deal is the Chinese apparently have reduced their VAT on tiles. I'm not sure whether it's 9% or 12%, but they have reduced or taken off the VAT, which means that they have become that much more expensive.

Management provided context on broader industry trends, noting that while the EU deal is distant, China's VAT reduction makes Indian exports more competitive, benefiting the Morbi industry, though Somany's direct export exposure is limited.

Asked by Nilesh Sharma

2 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Somany Ceramics reported a robust Q3 FY26, with consolidated sales growing 6% to INR677 crores. The company achieved a 16% increase in EBITDA, reaching INR62 crores, and saw an 80 basis points improvement in its EBITDA margin to 9.2%. Profit Before Tax (PBT) grew 28% to INR25 crores, while Profit After Tax (PAT) nearly doubled from INR9 crores to INR18 crores, reflecting strong operational efficiency and cost management.

Segmental Growth and Product Mix

The adhesive and waterproofing vertical demonstrated strong growth, expanding by approximately 35%. The tiles segment, which constitutes 83.5% of the overall business, grew 3.6%. The GVT (Glazed Vitrified Tiles) segment continued its growth trajectory, improving 4% over the last year to now represent 42% of the GVT segment. This shift towards higher-value products contributes to overall margin improvement.

Debt Reduction and Max Plant Turnaround

The company successfully reduced its total outside debt from INR288 crores at the beginning of the year to INR231 crores. The term loan of INR121 crores is scheduled for majority repayment within the next three years. Management expects the losses from the Somany Max plant, which were INR6 crores in Q3 FY26 (down from INR7.5 crores), to reduce substantially in Q4 FY26 and target profitability by FY27-28, contributing positively to future EBITDA.

Raw Material and Pricing Dynamics

Gas prices remained largely stable with a similar outlook for the future. The company utilizes a diversified fuel mix across its North, Morbi, and South plants, including natural gas, biofuel, and propane, providing insulation against price spikes. In bath fittings, price hikes are being implemented, primarily driven by a significant 22-23% increase in brass costs, which rose from INR570-580 per kg to INR770-780 per kg.

Market and Distribution Strategy

Domestic demand is showing gradual improvement, with increased offtake from the building sector and easing oversupply. The company's retail sales currently account for 77-78% of total sales, expected to shift to around 75% next year with increasing project contributions. Somany Ceramics maintains a strategy of having more, smaller dealers for diversification and is actively bundling products like tile adhesives with tiles to enhance distribution efficiency.

Outlook and Future Guidance

Management guided for a 1% to 1.5% improvement in EBITDA margin in Q4 FY26 and expects Max plant losses to fall below INR10 crores in FY27, achieving profitability by FY27-28. The company plans to maintain its ad spend at 2.5% of sales and anticipates a stable quarterly depreciation run rate of INR26-27 crores. Overall, the company expressed confidence in better times ahead, with no major investments planned, focusing on capacity utilization, debt reduction, and value addition.

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