1. Opening Hook
After years of housing euphoria and Morbi chaos, the tiles industry finally spotted “light at the end of the tunnel.” Conveniently, it arrived just as capacity utilization climbed 4% sequentially.
In Somany Ceramics Limited Q3 FY26 call, management sounded cautiously optimistic—domestic walk-ins are improving, Morbi exports are reviving, gas prices aren’t misbehaving, and PAT has doubled.
But before we pop open the grout, let’s remember: sales grew only 6%, capacity utilization is still below last year, and the Max plant continues to leak money—though slightly less dramatically.
Is this the beginning of a turnaround, or just a better quarter in a volatile cycle?
Read on. The tiles get shinier from here.
2. At a Glance
- Revenue ₹677 Cr – Growth at 6%, not fireworks, but at least not a damp monsoon.
- EBITDA ₹62 Cr – Up 16%; margins stretch to 9.2%, finally flexing.
- PAT ₹18 Cr – Almost doubled; profits woke up from hibernation.
- Capacity Utilization 80% – Better sequentially, but still shy of last year’s swagger.
- Adhesives +35% – The side hustle outshining the main act.
- Debt ₹231 Cr – Slimming down, one EMI at a time.
- Gas ₹44/scm – Stable. For once, fuel didn’t throw tantrums.
3. Management’s Key Commentary
“Domestic demand saw gradual improvement… better walk-ins recently.”
(Translation: Retail finally stopped ghosting us 😏)
“Sales growth has been 6% in Q3. We expected slightly better.”
(Translation: We were hoping for a bigger party.)
“EBITDA grew from ₹53 crore to ₹62 crore.”
(Translation: Margin discipline is finally working.)
“Max losses will reduce from ₹26 crore to below ₹10 crore next year.”
(Translation: The problem child is being sent to reform school.)
“We are very, very confident of lowering these losses or turning around in FY27.”
(Translation: Trust us. Seriously. This time. 😏)
“Gas prices remain largely stable.”
(Translation: One headache fewer in the spreadsheet.)
“We will maintain ad spend at 2.5% of sales.”
(Translation: Salman Khan left, but marketing budget didn’t.)
“Retail is 77%-78%; projects will rise gradually.”
(Translation: Projects don’t move overnight—approval files need tea breaks.)
“China has become less competitive due to VAT removal.”
(Translation: Sometimes geopolitics sends you a Diwali gift.)
Management tone: cautiously upbeat, focused on utilization, cost control, and bundling bathware + adhesives into the tile channel.
4. Numbers Decoded
Metric Q3 FY26 Q3 FY25 Commentary
---------------------------------------------------------------
Revenue ₹677 Cr ₹639 Cr +6%; steady, not stellar
EBITDA ₹62 Cr ₹53 Cr +16%; margin expansion visible
EBITDA Margin 9.2% 8.4% +80 bps; guidance +1–1.5% in Q4
PBT ₹25 Cr ₹19 Cr +28%; operating leverage kicking in
PAT ₹18 Cr ₹9 Cr Doubled; depreciation drag absorbed
Debt (Outside) ₹231 Cr ₹288 Cr* Deleveraging in motion
Capacity Utilization 80% 85% Lower YoY, higher QoQ
*Beginning of FY26
Decoded:
- Profit growth > revenue growth = cost discipline + operating leverage.
- Debt reduction meaningful; ₹70 Cr repayment over FY27–28.
- Max still loss-making (~₹6 Cr this quarter), but trajectory improving.
5. Analyst Questions
Q: Is domestic demand actually improving?
A: Yes, walk-ins are better and building completions are helping.
(Translation: It’s slow, but not stuck.)
Q: When does Max break even?
A: Losses below ₹10 Cr in FY27; profit likely FY28.
(Translation: Patience required. 18 months, give or take.)
Q: What about gas volatility?
A: Blended sourcing insulates spikes; Q4 likely ₹42–43/scm.
(Translation: Henry Hub tantrums won’t derail us.)
Q: Competitive threat from Infra.Market?
A: “We don’t see them in the market.”
(Translation: Seen, but not sweating—publicly.)
Q: Why gross margins lower vs past decade?
A: Tile prices fell, input costs didn’t fall proportionately.
(Translation: Industry deflation hit everyone.)
6. Guidance & Outlook
Management sticks to:
- Decent single-digit growth for FY26
- EBITDA margin expansion of 1–1.5% in Q4
- Max losses cut sharply in FY27
- Ad spend
