Somany Ceramics has announced its strategic financial roadmap, focusing on significant debt reduction and operational cost optimization over the coming years.

Debt Reduction Strategy

The company has forecasted a substantial reduction in its total external debt position, targeting approximately INR 50 crore by FY28. This ambitious debt reduction plan involves repaying INR 70 crore during the combined period of FY27 and FY28.

Operational Cost Management

Somany Ceramics expects operational costs to remain stable in the near term. Gas prices, a significant input cost for ceramic manufacturing, are anticipated to be stable and average around INR 42.5 to INR 43 for Q4.

Marketing Expense Optimization

The company plans to normalize its advertising expenses to 2.5% of sales, indicating a strategic approach to marketing spend optimization. This normalization suggests a balanced approach between brand promotion and cost efficiency.

These strategic initiatives reflect Somany Ceramics' commitment to strengthening its financial position while maintaining operational efficiency across key cost centers.

Somany Ceramics Limited conducted its Q3FY26 earnings conference call on January 28, 2026, providing comprehensive insights into the company's financial performance and strategic outlook. The call, moderated by SKP Securities, featured key management personnel including MD & CEO Abhishek Somany, CFO Sailesh Raj Kedawat, and other senior executives.

Financial Performance Highlights

The company reported consolidated sales growth of 6% in Q3FY26, reaching Rs. 677 crores. EBITDA demonstrated strong improvement with 16% growth from Rs. 53 crores to Rs. 62 crores, resulting in EBITDA margin expansion to 9.2%, representing an 80 basis points improvement.

Segment-wise Performance Analysis

The company's diversified portfolio showed varied growth across segments. The adhesive and waterproofing vertical demonstrated exceptional performance with 35% growth, while tiles segment grew by 3.6%. The GVT (Glazed Vitrified Tiles) segment continued its upward trajectory, improving from 38% to 42% of the product mix.

Market Conditions and Outlook

Management highlighted improving domestic demand conditions in Q3, attributed to reduced export pressure and increased offtake from the building sector. Export projections for the industry stand at Rs. 19,000-19,500 crores, representing 8-9% growth from the previous year. The company's capacity utilization decreased year-over-year from 85% to 80% but showed quarterly improvement from 76% to 80%.

Operational Developments

The company's debt reduction strategy continues to show progress, with total outside debt decreasing from Rs. 288 crores at the beginning of the year to Rs. 231 crores. The debt structure comprises Rs. 121 crores in term loans and Rs. 95 crores in working capital, with majority repayment scheduled over the next three years.

Strategic Initiatives and Guidance

The management maintained its guidance for decent single-digit growth for the year with EBITDA margin improvement of 1-1.5% expected in Q4 FY26. The company added 170 net dealers in nine months, bringing the total to 3,050 dealers and 530 showrooms. Gas pricing remained stable, providing cost predictability for operations.

Regarding the Max plant operations, management expects substantial loss reduction in Q4, with annual losses projected to decrease from Rs. 25-26 crores to below Rs. 10 crores in FY27. The plant is expected to achieve breakeven within 18 months.

Management Commentary on Market Dynamics

CEO Abhishek Somany expressed optimism about market recovery, noting improved walk-ins and dealer feedback. The company's retail business continues to dominate at 77-78% of sales, with gradual shift expected toward project sales reaching 75% retail mix in the coming year. The management also announced significant price increases in bath fittings segment, driven by 22-23% inflation in brass costs from Rs. 570-580 per kg in April to Rs. 770-780 per kg currently.

Source: Somany Ceramics Q3FY26 Earnings Conference Call Transcript