Saturday, August 8, 2026 10:30 AM IST
Event Participants
Executives - 2
Vikas Kothari (CFO), Deepak Chaudhary (VP Finance & Investor Relations)
Analysts - 6
Anu Parakh (Anand Rathi), Praveen Sahay (PL Capital), Rahul Majedia (Stratton Oakmont Capital), Ritesh Shah (Investec India), Shubhi Gupta (Trinetra Asset Managers), Varun Julasaria (360 ONE Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹486 crores | +19.5% YoY; volume-led. Turnover discounts now netted from revenue (2.5% impact Q1 FY27, 3% restated Q1 FY26); no impact on absolute profitability |
| Sanitaryware Revenue | 47% of mix | +14% YoY (10% volume + 2% price + 2% mix); price hike in May'26 yet to fully reflect |
| Faucetware Revenue | 40% of mix | +25% YoY (18% volume + 4% price + 3% mix); strong traction, capacity constrained at 96% |
| Tiles Revenue | 11% of mix | +22% YoY |
| Wellness Revenue | 2% of mix | -7% YoY, single soft category |
| EBITDA (excl. other income) | ₹49.2 crores | Margin 10.1% vs 13.1% YoY; ~4.35% margin drag from one-time items (LTS ₹6.3 cr, kiln under-absorption ₹3.7 cr, project closures ₹4 cr, delayed price effect 1.5%); normalized EBITDA ~14.5% |
| PAT | ₹45 crores | vs ₹47 crores YoY |
| EPS | ₹35.15 | vs ₹36.08 YoY |
| Gross Margin | ~46% | vs typical ~51%; impacted by brass and gas cost spike; recovery expected from Q3 if input prices hold |
| Gas Cost | ₹848.43/cubic meter | vs ₹33.17 in Q1 FY26 (elevated; 69% GAIL, 31% Sabarmati); gas ~3.3% of revenue |
| Capacity Utilization - Sanitaryware | 61% reported | Operational ~80% from June onward (both kilns running; single kiln April-May due to gas supply uncertainty) |
| Capacity Utilization - Faucetware | 96% | Can operate >100%; brownfield expansion adds capacity in Q4 FY27 |
| Inventory Days | 68 days | Improved from 80 days YoY |
| Receivables Days | 30 days | Improved from 38 days YoY |
| Payables Days | 48 days | Increased from 43 days YoY |
| Net Working Capital Cycle | 50 days | Improved from 75 days YoY |
| Cash & Cash Equivalents | ₹943 crores | Strong balance sheet supports growth and brand investments |
Geographic & Segment Commentary
Sanitaryware (47% of revenue): +14% YoY with 10% volume growth, 2% price and 2% favorable mix. Both kilns operational from June; operational utilization ~80%. Management reviewed greenfield expansion plans and expects to decide by end-FY27 on the deferred ₹130-150 crore project, with construction taking ~18 months post-approval.
Faucetware (40% of revenue): +25% YoY (18% volume, 4% price, 3% mix) with capacity utilization at 96%. Brownfield expansion on track for capacity from Q4 FY27. Brass cost elevated (~INR900/kg in July vs INR665 in December) driving margin pressure; further price hike evaluated if brass exceeds INR900-950.
Project vs. Retail: Project segment share rose from 39% to 43% QoQ as management deliberately foreclosed old-price orders before further cost escalations. Retail pricing revisions effective July; project contracts transition to revised pricing post-Q2, supporting the margin recovery trajectory in H2.
Geography & Mix: Tier 1 and Tier 3 cities each contributed 38%, Tier 2 at 24% of sales. Premium segment accounted for 44%, mid 37%, entry-level 19% of product mix.
Company-Specific & Strategic Commentary
Brand Reinvestment: Launched "Your Moment of CERA" campaign with Kriti Sanon as brand ambassador across TV, digital, and social. FY27 A&P budget of ~₹85 crores planned with flexibility to expand if needed.
Digital & Channel Transformation: Extended dealer management system (DMS) to retailer loyalty program, providing secondary sales visibility, inventory tracking, and transparent loyalty incentives—an enabler for faster decision making and operational efficiency.
Supply Chain Internalization: Progressively reduced dependence on Morbi cluster by internalizing higher-selling outsourced SKUs (₹2-3 crores small investment). Strategy remains complex SKUs in-house, simpler ones outsourced; ~50-50 long-term ratio with ability to shift mix dynamically.
New Brands (Senator & POLIPLUZ): Still in build-up phase; management evaluates progress over longer time horizon, targets intact. Senator flagship stores to scale from 35 to ~50 by end-FY27.
Leadership Transition: Mr. Baliga resigned for personal reasons; national head from succession plan leads Senator/POLIPLUZ, with Baliga supporting until September 30. No expected impact on execution or targets.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 18-20% for FY27 | Q1 delivered 19.5%; management confident of sustaining momentum; demand improving across retail and project |
| EBITDA Margin | 13.5-14% for FY27 | Adjusted for turnover discount presentation (~14.4% on old revenue basis); normalized Q1 EBITDA ~14.5% ex one-time items; Q2 still impacted by project pricing transition, full recovery post-Q2 |
| A&P Spend | ~₹85 crores FY27 | Brand investments across TV, digital, social, on-ground; may increase if required |
| Capex | ~₹43 crores FY27 | Faucetware brownfield expansion, manufacturing efficiencies, digital initiatives |
| Faucetware Capacity | Incremental capacity from Q4 FY27 | Brownfield expansion on schedule; utilization was 96%; can exceed 100% in interim |
| Greenfield Sanitaryware | Decision by end-FY27 | ₹130-150 crore project; review based on sustained demand; construction ~18 months post-start |
Risks & Constraints
| Risk | Context |
|---|---|
| Input Cost Inflation | Brass at ~₹900/kg (Dec: ₹665, steadily rising) and gas at ₹848.43/m³ (vs ₹33.17 YoY). Gross margin compressed to ~46% from typical 51%. Management evaluating further price hikes if brass exceeds ~INR900-950; multiple price increases may lead to demand resistance or further margin lag on project contracts |
| Morbi Cluster Supply Disruption | Outsourcing hub operating below full efficiency due to industry challenges. Management internalized key SKUs, but continued uncertainty in Morbi could impact product availability or force further in-house cost absorption |
| Wage Cost Escalation | Four-year workers' wage settlement ( |
| Project Pricing Lag | Pre-booked project orders insulated from price hikes; transition to revised pricing only post-Q2. Delayed price realization risks margin recovery timeline if input costs keep rising |
| Competitive & Demand Environment | Slow consumption recovery in retail, competitive intensity in premium segment; sustainability of double-digit volume growth dependent on macro improvement, especially in Tier 2/3 markets |
Q&A Highlights
Revenue Growth Composition & Volume Split
- Question: How much of the 14% and 25% growth in sanitaryware and faucetware is volume vs. price, given 12%/16% cumulative hikes? (Praveen Sahay, PL Capital)
- Answer: Sanitaryware 14% = 10% volume + 2% price + 2% mix; Faucetware 25% = 18% volume + 4% price + 3% mix. Price impact will strengthen from Q2 as May hikes get fully reflected in dispatches. (Vikas Kothari)
Senator & POLIPLUZ Traction
- Question: Can you give color on Senator and POLIPLUZ contribution and whether they are driving mix changes? (Praveen Sahay)
- Answer: Still in build-up phase; targets intact but evaluating quarterly performance is inappropriate for new initiatives. Will communicate as they scale meaningfully. (Vikas Kothari)
Accounting Change Impact on Margin Guidance
- Question: With turnover discounts now netted from revenue, does the 13.5-14% EBITDA margin guidance change? (Praveen Sahay)
- Answer: Absolute EBITDA unchanged. Since revenue reduces ~2.5-3%, the margin percentage on lower turnover implies ~14.4% on old revenue basis. Guidance of 13.5-14% intact with this adjustment. (Deepak Chaudhary)
One-Time Staff Settlement & Wage Outlook
- Question: What was the quantum and nature of the one-time settlement in staff cost, and what's the new run-rate? (Varun Julasaria, 360 ONE Capital)
- Answer: Four-year union wage agreement settled in May, ~20% increase on worker wages. Retro for Sep'25-Mar'26 = ₹6.3 crores; current quarter portion = ₹3 crores. Full-year impact ~₹12 crores plus ₹6.3 crores retro = ₹18.3 crores in FY27 P&L. Staff cost expected near ₹300 crores for FY27. (Deepak Chaudhary)
Morbi Internalization & Store Expansion
- Question: Details on internalizing outsourced SKUs and progress on flagship store target of ~60? (Shubhi Gupta, Trinetra Asset Managers)
- Answer: Internalizing higher-selling SKUs previously outsourced to Morbi due to cluster inefficiencies; small ₹2-3 crores investment needed (adjusting casting lines). Senator stores targeted at ~50 by end-FY27 from 35. (Deepak Chaudhary)
Management Transition Impact
- Question: Who takes over Senator/POLIPLUZ post Mr. Baliga's resignation, and are targets intact? (Ritesh Shah, Investec)
- Answer: National head from succession plan leads these businesses; Baliga supports till Sept 30. Dedicated teams, established processes; no impact on execution or targets. (Vikas Kothari)
Margin Dilution Analysis & Pricing Power
- Question: Is margin decline a deliberate pricing strategy to gain share or input cost inflation, and what's the pricing power? (Rahul Majedia, Stratton Oakmont)
- Answer: Breakdown of one-time Q1 margin drag: LTS ₹6.3 cr (1.3%), single-klin under-absorption ₹3.7 cr (0.75%), project closures ₹4 cr (0.8%), delayed price increase effect (1.5%). Total ~4.35% → normalized EBITDA ~14.5%. Price hikes (12% sanitaryware, 16% faucetware) well absorbed; full-year margin guidance of 13.5-14% stands. (Deepak Chaudhary)
Greenfield Expansion Review
- Question: With ~20% growth and utilization improving, will the deferred ₹130-150 crore greenfield be revived? (Rahul Majedia)
- Answer: Sanitaryware operational utilization ~80% from June both kilns running. Still have headroom. Reviewing greenfield decision by end-FY27 if demand sustains; construction takes ~18 months post-start. (Vikas Kothari)
FY27/H2 Margin Trajectory
- Question: Can you guide H2 FY27 EBITDA margins and timeline to historical 16% average? (Anu Parakh, Anand Rathi)
- Answer: Standing by 13.5-14% for FY27. H2 should see recovery as project pricing transitions post-Q2. FY28 guidance will be shared at year-end; subsequent margin expansion depends on demand, competitive intensity, and input costs. (Deepak Chaudhary, Vikas Kothari)
Gross Margin Recovery & Brass Price Outlook
- Question: With brass at all-time highs, can gross margins expand from ~46% and is another price hike planned? (Varun Julasaria)
- Answer: Q1 46% is an aberration. Expected recovery to ~51% from Q3 if brass and gas hold current levels. Brass trajectory: ₹665 (Dec) → ₹747 (Jan) → ₹758 (Feb/Mar) → ₹800 (Apr) → ₹860 (May) → ₹880 (Jun) → ~₹900 (Jul). Further price hike likely if brass breaches ~INR950-1,000. (Deepak Chaudhary)
Key Takeaway
Cera delivered a strong Q1 FY27 with revenue of ₹486 crores (+19.5% YoY), driven by broad-based volume growth across sanitaryware (+14%, 10% volume) and faucetware (+25%, 18% volume), with both retail and project segments performing well. Reported EBITDA margin of 10.1% was depressed by 4.35% of one-time items—wage settlement retro provision (₹6.3 crores), single-klin under-absorption (₹3.7 crores), project foreclosures (₹4 crores), and delayed price realization—with normalized EBITDA near 14.5%. Management maintained FY27 guidance of 18-20% revenue growth and 13.5-14% EBITDA margin, underpinned by cumulative price hikes of 12% (sanitaryware) and 16% (faucetware), improving working capital (net cycle down from 75 to 50 days), and a strong ₹943 crore cash position. Strategic focus remains on the Kriti Sanon brand campaign (₹85 crores A&P spend), digital DMS/loyalty platform extension, SKU internalization from Morbi, and Senator/POLIPLUZ brand building. Key watch points include elevated brass (~₹900/kg) and gas costs, potential further price hikes, and the FY27-end decision on the ₹130-150 crore greenfield sanitaryware expansion.