Somany Ceramics Limited

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.

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.

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.

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.

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.

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.