Somany Ceramics

Somany Ceramics reported a 6% sales growth in Q4 FY26 and 5% for the full year, slightly surpassing previous year's performance. EBITDA saw a 3.2% improvement in Q4 and 1% for FY26, with margins at 11.4% and 9.3% respectively. Capacity utilization for the year was 79%, improving to 82% in Q4. The Max plant achieved breakeven in Q4, a significant turnaround from a INR9 crore loss in the prior year quarter, and reduced its full-year loss to INR21 crores from INR27 crores.

The company saw a strong net addition of 200 dealers, expanding its total showroom network to 3,100 across India. Working capital management improved significantly, with receivable days reduced from 51 days to 40 days (38 days on a standalone basis). The sanitaryware segment demonstrated robust growth of 8% for the year, reaching INR320 crores. GVT tile volumes increased by 3%, while ceramic and PVT tile volumes saw a 3% reduction.

Gas prices remained relatively constant before the geopolitical events but increased significantly thereafter. For Q4 FY26, Morbi's gas price was around INR46, while North was INR48, and South was INR50. Current Morbi pricing for May is INR74 plus 6% ballpark, with North being INR3-4 cheaper. Management noted that the industry's pricing discipline has narrowed the gap between unorganized and branded players, which is a positive for organized players.

The Morbi region experienced significant disruptions, with many plants shutting down due to gas supply issues and subsequent price hikes. As of May 15, 2026, approximately 60-65% of Morbi plants are operational, expected to reach 85% by month-end. However, a major labor shortage in Morbi is hindering the full ramp-up of production. This disruption is seen as beneficial for organized players like Somany, as it reduces inefficient capacity in the market.

Management guided for an EBITDA margin improvement of at least 1.5% for FY27, targeting around 10.8%. If current price levels hold, revenue growth is projected to be between 20-25%. Volume growth for the tile business is expected to be in decent single digits, while sanitaryware and adhesive businesses are targeted for healthy double-digit growth. Input cost increases, primarily from gas, have largely been passed on, with a total price increase of INR6.5-7 per square foot.

April was a challenging month due to several factors: unavailability of material from shut Morbi plants, delayed absorption of significant price increases (15-17% by Somany, 30% by Morbi) by consumers, and cautious dealer behavior. Despite these headwinds, management noted that April still saw some growth. They anticipate pent-up demand to materialize by month-end or June, as tiles are an essential product with no fungible alternative.