Summary
Cera Sanitaryware Limited - Q3 FY 2026 Earnings Call Summary Thursday, February 05, 2026 11:00 AM
Event Participants
Executives 2 Deepak Chaudhary (VP Finance and IR), Vikas Kothari (CFO)
Analysts 6 Archana Gude, Arun Baid, Bhavin Rupani, Jaspreet Singh, Mithun Aswath, Sunny (Individual Investor), Sujeet (Bajaj Life Insurance)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹499 crores | +11.1% YoY; Reflects structural recovery and improved market traction in retail and projects. |
| EBITDA (excl. Other Income) | ₹51 crores | -13.5% YoY; Impacted by higher trade discounts, elevated brass costs (+12%), and brand launch expenses. |
| EBITDA Margin | 10.2% | -300 bps YoY; Dragged by project-heavy mix, phasing of publicity spends, and pre-operating costs for Senator/POLIPLUZ. |
| Profit After Tax (PAT) | ₹24 crores | -47.8% YoY; Impacted by ₹18.46 crore one-time exceptional charge related to the New Wage Code. |
| Faucetware Revenue | ₹199.6 crores | +18.2% YoY; Strongest growing segment despite input cost pressures. |
| Sanitaryware Revenue | ₹239.5 crores | +6.4% YoY; Maintained dominant revenue share at 48%. |
| Cash & Cash Equivalents | ₹757 crores | Strong liquidity position maintained to fund strategic initiatives and future expansion. |
| Net Working Capital | 79 days | Improved from 81 days YoY; Inventory days at 84 and Receivables at 33. |
| Capacity Utilization | 102% (Faucets), 82% (Sanitary) | Faucetware running above rated capacity; Sanitaryware utilized for complex in-house production. |
Geographic & Segment Commentary
- Core Categories: Sanitaryware and Faucetware combined represent 88% of total revenue, with Faucetware witnessing a sharp double-digit volume recovery. Wellness saw the highest growth at 29.4% YoY, though on a smaller base (2% of mix).
- Regional Performance: A significant shift in regional mix was noted as Uttar Pradesh emerged as the leading market, overtaking Kerala. Markets in Bihar and Jharkhand are also showing signs of reversal and growth following focused interventions.
- Tier Mix: Tier 3 cities remain the largest contributors at 41% of sales, followed by Tier 1 at 36% and Tier 2 at 23%, indicating deep penetration in value-focused regional markets.
Company-Specific & Strategic Commentary
- Brand Tiering (Senator & POLIPLUZ): Strategic investment phase continues with Senator (Luxury) operating 32 flagship stores and POLIPLUZ (Value) reaching 65 distributors. Combined revenue for these brands reached ₹7-8 crore in 9M FY26, with a revised FY26 target of ₹20 crore.
- Digital Transformation: The Dealer Management System (DMS) is being rolled out to improve secondary sales visibility. This will eventually automate the retailer loyalty program, which currently includes 28,000 enrolled members.
- Project Segment Traction: Project share remained steady at 38-39% of sales; however, higher trade discounts in this segment to capture large developer contracts weighed on current quarter margins.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 7% to 8% for FY26 | Based on sequential recovery in Q2/Q3 and expected double-digit momentum in Q4. |
| EBITDA Margin | 13% to 14% for Q4 FY26 | Recovery expected via better fixed cost absorption on higher Q4 volumes and recent price hikes. |
| Price Increase | 4% (Sanitary), 11% (Faucets) | Effective March 1, 2026; implemented to offset the sharp rise in brass prices to ₹800/kg in Jan 2026. |
| New Brands Revenue | ₹100 - ₹120 crores (FY27) | Anticipated scale-up of Senator and POLIPLUZ as retail footprints stabilize. |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Volatility | Brass prices rose 12% in Q3 and spiked further to ₹800/kg in January; sustained increases may require further pricing actions. |
| New Wage Code Impact | A one-time exceptional impact of ₹18.46 crore was recognized for gratuity and leave salary liabilities, affecting quarterly PAT. |
| Retail Demand Mutedness | While “green shoots” are visible, retail demand remains uneven compared to the steadier residential project upcycle. |
Q&A Highlights
Margin Compression & Recovery
- Question: What caused the 300 bps drop in EBITDA and is 10% the new normal? (Jaspreet Singh)
- Answer: The drop was driven by higher trade discounts for projects, a 12% rise in brass costs, and a “phasing impact” where publicity and CSR spends were concentrated in Q3. Management expects margins to return to 13-14% in Q4 and 15-17% in H2 FY27. (Vikas Kothari, Deepak Chaudhary)
Pricing Strategy
- Question: Why was the price hike delayed until March when competitors moved in January? (Arun Baid)
- Answer: Cera took a substantial hike in Sept 2024 which protected margins earlier. The current hike (11% in Faucets) is sufficient to cover cost increases seen until date. (Deepak Chaudhary)
Capacity & Capex
- Question: What is the status of the new greenfield Sanitaryware plant? (Mithun Aswath)
- Answer: Land is purchased, but construction is deferred. Internal process efficiencies have created “a plant within a plant,” allowing higher output from existing facilities. A final decision will be made post-Q4. (Deepak Chaudhary)
Senator & POLIPLUZ Performance
- Question: What is the spend and revenue contribution from new brands? (Arun Baid)
- Answer: Q3 spend was ₹6 crore (mostly salaries/promos). 9M revenue was ₹7-8 crore. FY26 target revised to ₹20 crore (from ₹40 crore) due to slower store rollout. (Deepak Chaudhary)
Key Takeaway
Cera Sanitaryware delivered a resilient 11.1% YoY revenue growth in Q3 FY26, signaling a structural recovery in demand led by the Faucetware segment (+18.2% YoY). While top-line momentum improved, EBITDA margins faced temporary pressure, dropping to 10.2% due to elevated brass costs, higher project discounts, and a one-time ₹18.46 crore charge related to the New Wage Code. The company is aggressively scaling its brand architecture with 32 Senator stores and 750 POLIPLUZ dealers to capture premium and value segments. Management remains confident in returning to 13-14% margins by Q4 FY26, supported by an 11% average price hike in Faucetware and improved retail traction. With a robust cash balance of ₹757 crores and shifting regional strengths in markets like Uttar Pradesh, Cera is well-positioned to capitalize on the residential real estate upcycle.
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