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SONAM LIMITED — Q4 FY26 earnings call

Call held 1 Jun 2026

Management summary

Sonam Limited reported a strong FY26 with revenue growing 64.21% to Rs. 171 crores. However, profitability growth lagged, with PAT increasing 15.63% to Rs. 7.32 crores, leading to margin compression. The company attributes this to raw material cost increases and geopolitical issues affecting exports and freight. Management guided for 25-30% revenue growth in FY27, driven by premiumization and distribution expansion, and expects margin improvement.

Highlights

  • Strong revenue growth of 64.21% YoY to Rs. 171 crores in FY26, demonstrating robust business model and execution.

  • Profit after tax increased by 15.63% to Rs. 7.32 crores (732 lakhs) in FY26.

  • EBITDA grew by 12.31% to Rs. 15.09 crores (1509 lakhs) in FY26.

  • Debtors reduced from Rs. 10 crore in FY25 to Rs. 6.73 crores in FY26, indicating improved working capital management.

  • Management expects 25-30% revenue growth in FY27, driven by premiumization and distribution expansion.

Concerns

  • PAT growth (15.63%) significantly lagged revenue growth (64.21%) in FY26, indicating margin pressure.

  • EBITDA margin declined to 8.79% and PAT margin to 4.26% in FY26.

  • Exports affected by Middle East geopolitical crisis, leading to pending shipments and increased freight costs.

  • Raw material cost increases contributed to margin pressure, impacting overall profitability.

Key financials

  1. Revenue ₹171 Cr +64.2%YoY
  2. EBITDA ₹15.09 Cr +12.3%YoY
  3. PAT ₹7.32 Cr +15.6%YoY
  4. EBITDA Margin 8.8%
  5. PAT Margin 4.3%

What they filed

Q1 FY27: revenue up 75.6%, net profit up 127.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue24 25 32 38 31 +28%38 +51%64 +101%67 +76%
EBITDA3 4 3 3 2 −18%4 −2%6 +101%5 +100%
Net profit1 2 2 1 1 −33%2 +4%3 +71%3 +127%
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

Revenue

  • Revenue Growth Revenue · FY27 · High confidence 25% to 30%
    FY'27, you must have seen that as soon as the war started in the gulf, so we have made the purchase. So, according to that, we feel that there will be a growth of 25% to 30% in FY'27.

    — Jayesh Shah

What to watch in Q1 FY27

Margin Improvement

FY27
Current EBITDA margin 8.79%, PAT margin 4.26% (FY26)
Target Improved margins

Why it matters

Key to translating strong revenue growth into higher profitability and demonstrating operational efficiency.

But the margin will increase year-on-year. It will not increase percentage-wise, but the margin will increase.

Risks & concerns

  • Geopolitical war scenario (Middle East)

    high

    Affecting export demand, especially to Iraq, causing pending shipments and increased freight costs.

    Management acknowledged

  • Raw material price increase

    medium

    Increased raw material costs contributed to margin pressure in FY26.

    Management acknowledged

  • Market competition

    medium

    Competition is a factor in not being able to fully pass on cost increases, impacting margins.

    Management acknowledged

  • Product damage/returns in online sales

    low

    Wall clocks are prone to damage, leading to a cautious trial phase for online expansion.

    Management acknowledged

Q&A highlights

4 direct
Margin pressure despite strong revenue growth in FY26 Direct
Yes, sir, because market's competition and revenue has increased, but margin has not increased because of so many problems in raw material price increase and this situation of war in geographies.

Explains the discrepancy between high revenue growth and lower profit growth, attributing it to external cost pressures and competition.

Asked by Bhavesh Jani

Impact of Middle East geopolitical crisis on logistics, supply chain, and export demand Direct
Yes. Export demand has been affected. Our main export market is Iraq. We have a lot of orders from Iraq. Goods are also ready. But we are on hold due to logistic problems. It is temporary.

Highlights a significant external risk impacting current export operations and increasing freight costs, with potential for future resolution.

Asked by Bhavesh Jani

Company's strategy to increase online presence and market share Partial
Yes. We are on Amazon, Flipkart and Myntra. We have started in all of the three and going ahead we have planned to expand further... Wall clock is such an item where there is a part for damage. So, that is why we have started a trial phase. We will check for two, three months that how much goods are returned to us and how much damage we are facing. After that, we will start in full force.

Details the company's cautious, phased approach to e-commerce expansion due to product-specific challenges like potential damage and returns.

Asked by Bhavesh Jani

Current capacity utilization level Direct
50% to 60%.

Indicates significant available capacity, suggesting the company can accommodate future growth without immediate large capital expenditure.

Asked by Meet Gada

Working capital cycle and potential improvements Direct
Our working capital cycle is of 29 days for debtors... Yes, it is of 29 days. And our creditors' is of 37 days... our cash flow is more and our presence in market, our value is like, we are working in 70% to 80% in advance. It is going on credit to old customers. So, we will not have that much effect.

Provides specific metrics for working capital efficiency and management's confidence in its resilience despite external challenges.

Asked by Bhavesh Jani

2 min read 6 chapters

Detailed narrative

Strong FY26 Revenue Growth with Margin Compression

Sonam Limited reported a robust 64.21% year-on-year increase in revenue from operations, reaching Rs. 171 crores for FY26. Despite this strong top-line performance, profit after tax (PAT) grew at a slower pace of 15.63% to Rs. 7.32 crores, leading to margin compression. The EBITDA margin for FY26 stood at 8.79%, and the PAT margin was 4.26%, reflecting the impact of increased raw material costs and market competition.

FY27 Growth Outlook and Premiumization Strategy

For FY27, management projects a revenue growth of 25% to 30%. This growth is expected to be driven by a strategic shift towards value over volume, with new product launches in the Rs. 3000 to Rs. 6000 price range, targeting the premium segment. The company aims to expand its product portfolio with new designs and contemporary collections to cater to increasing consumer purchasing power.

Impact of Geopolitical Tensions on Exports

The ongoing Middle East geopolitical crisis has significantly impacted the company's export operations, particularly to its main market, Iraq. While the company has a 'good order book' and goods are ready for shipment, logistics problems have put these orders on hold, leading to increased freight costs. Management views this as a temporary issue, but it currently affects export demand and operational efficiency.

Distribution Expansion and Market Penetration

A key focus for FY26 was strengthening market presence across India by extending the distributor network and enhancing channel relationships. The company plans to further expand into regions with limited geographical penetration to build a stronger pan-India presence. This strategy is expected to significantly improve market coverage and product accessibility, accelerating revenue growth in domestic markets.

Cautious Approach to Online Channel Expansion

Sonam Limited has initiated its online presence on major platforms like Amazon, Flipkart, and Myntra. However, the company is adopting a cautious 'trial phase' approach for two to three months to assess product damage and return rates, which are a concern for wall clocks. Full-scale online expansion will commence only after evaluating the results of this trial, ensuring sustainable growth in the e-commerce segment.

Efficient Working Capital Management

The company reported an efficient working capital cycle, with debtors at 29 days and creditors at 37 days. Debtor days have improved, reducing from Rs. 10 crores in FY25 to Rs. 6.73 crores in FY26. Management indicated that a significant portion of their business (70-80%) operates on an advance payment basis with old customers, which helps mitigate the impact of external factors on cash flow.

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