Somany Ceramics (531548) Q2 25/26 earnings summary

Executive summary

• Achieved 3.6% year-over-year revenue growth in Q2 despite severe flooding and a major plant outage in the northern region, which accounts for nearly half of tile sales.

• Board approved unaudited standalone and consolidated financial results for the quarter and half year ended September 30, 2025, and a draft scheme of amalgamation for three wholly owned subsidiaries to consolidate operations and reduce compliance.

• Operating margins were maintained sequentially, supported by cost-optimization initiatives, though Q2 consolidated PAT declined 29% YoY.

• Insurance claims have been filed for the Kassar plant outage, with potential recovery expected in future periods.

• JVs, particularly Somany Max, continued to post losses, but corrective actions are expected to yield improvements from Q4 onward.

Financial highlights

• Q2 consolidated revenue was INR 681 crores, up 3% YoY; standalone revenue was INR 656 crores, up 2.6% YoY.

• Q2 consolidated EBITDA margin at 7.9% (down from 8.5% YoY); Q2 consolidated PAT at INR 12 crores (down 29% YoY); standalone PAT up 23.4% YoY to INR 23 crores.

• Net dealer additions in H1 were 119, bringing the total to about 3,000 dealers and 520 exclusive showrooms.

• Working capital days improved to 192 as of Sep'25 (consolidated); no fund-based working capital was used in the quarter.

• JV debt stands at INR 257 crore, with Somany Ceramics standalone remaining debt-free; consolidated borrowings (non-current) decreased to ₹11,997 lakhs as of September 30, 2025.

Outlook and guidance

• Maintains guidance for mid to high single-digit revenue growth for FY 2026 and high single-digit growth for FY 2027, with further 150 bps margin improvement.

• Expects EBITDA margin improvement of 100-150 bps in H2, targeting double-digit margins in the next couple of quarters.

• The amalgamation is expected to enhance business efficiency, reduce overheads, and improve resource utilization.

• No major CapEx planned for the next 12-18 months; focus on deleveraging and profitability.

• Early signs of recovery in discretionary spending and export uptake, along with government support in housing and infrastructure, are expected to create a more favorable environment in H2.