Somany Ceramics (531548) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 was challenging with flat sales volume and value due to muted demand, extended elections, and heat, resulting in a marginal decline in consolidated sales to INR 576 crores from INR 584 crores YoY.

• Operating margin was maintained at 8.5% YoY, reflecting efficient cost management despite lower sales.

• Balance sheet improved with receivables down by five days and a healthy dealer network maintained; distribution network expansion continues.

• Company avoided aggressive discounting and maintained pricing discipline amid high industry competition.

• Unaudited standalone and consolidated financial results for Q1 FY25 were approved by the Board and reviewed by the Audit Committee, with a clean limited review report.

Financial highlights

• Consolidated sales for Q1 FY25 at INR 576 crores, down 1.4% YoY; standalone sales at INR 559 crores, down 3.1% YoY.

• Consolidated EBITDA at INR 49 crores, down 3.2% YoY; EBITDA margin at 8.5%.

• Gross margin improved YoY by 230 bps to 35.2%, driven by input cost efficiencies and stable gas prices.

• Profit before tax at INR 18 crores, down 26.6% YoY; PAT at INR 12 crores, down 2.5% YoY.

• ESOP expense for Q1 was INR 93 lakh; employee benefit expenses increased due to ESOP provisions.

Outlook and guidance

• Double-digit growth targeted for FY25, mainly volume-driven, with EBITDA margin expected to improve by 1%-1.5% if gas prices remain stable.

• Double-digit CAGR growth expected over the next 3-4 years, focusing on middle and top-end segments.

• H2 expected to be robust, with demand picking up from Q3/Q4 as real estate completions and government housing schemes (PMAY) drive tile demand.

• Positioned to leverage future volume gains as market demand improves.