Somany Ceramics Q1 concall summary –

Q1 volume growth at 8 pc. Capacity utilisation- lowest (except COVID days) due lower demand, higher inventory and maint shutdowns

Capacity utilisation now increasing. This plus cost controls,lower gas prices should lead to margin expansion

Current capacities –

Tiles-75 million sq mtrs ( including JVs and outsourcing tie ups )
Sanitaryware-7.8 lakh pcs
Bath fittings-13 lakh pcs

Capacity utilisation in Q1 –

Tiles-70 pc
Sanitaryware-58 pc
Faucets-70 pc

Tiles sales mix-

Own Mfg- 37pc
JVs-35pc
Outsourcing-29pc

Financial outcomes( consolidated ) –

Sales- 584 vs 555 cr
EBITDA- 51 vs 45 cr ( margin at 8.7 vs 8.1 pc )
PAT- 15 vs 21 cr ( due exceptional item of 7 cr )

Total Tiles sold- 15.41 vs 14.25 msm
Bathware sale contribution – 58 vs 54 cr

Net debt down from 308 to 190 cr, qoq !!!

Capacity utilisation now at 100 pc. Things r looking much much better now

Gas prices have come off wef Q1. Now with increased capacity utilisation, EBITDA margins should improve signifigantly

Sanitaryware has also picked up momentum in Q2

Added 50 dealers, 25 showrooms in Q1

Demand in Q2 has been much better. Should pick up further in Q3

Gas prices have further corrected from Q1 levels, down another 7-8 pc

Large format tiles to start production in Q3. No major fresh capex planned in next 2 yrs

Company’s new capacity will come up in Nepal next yr

Share of GVT (value added) tiles now at 35 pc vs 32 pc in Q4

North India is Somany’s biggest mkt. Have seen better sales in July despite heavy rains

Q1 is generally weak as labour goes back home in June due heat

75 pc of company’s sales come from retail segment

Rest is a combination of – Govt business, Private builders and corporates buying directly

Aim to end the FY with 10-10.5 pc EBITDA margins (in Q1, margins were 8.7 pc)

Looking to clock > 300 cr revenues from bath ware business this yr and > 500 cr in next 3 yrs

It has 3-4 pc higher margins than tiles business

Disc: hold a tracking position, looking to add more as the future looks bright

Yes, I feel only threat to business I see if any creditable competition come and disrupt the market. also DF has doen tie yo with Plaza premium for their all 340 lounges, that is big positive and promoter madam was from lounge business so she has good know how of this business…So top line keep growing and this margin issue market will forget in max 2 quarters … also somebody mentioned that what stops infy or TCS to come to this market & disrupt the DF business, so hoe many businesses Infy & TCS disrupted in India till date?? I dont see they were able to disrupt any… and DF has build business when both Priority Pass and DragonPass present in market… Biggest Risk I see for their business is if govt put a cap MDR charges for banks…lets wait & watch this stock seems to be very interesting stock to track…

Agreed bank may not immediately tie up with a new player but what about existing players like priority pass.
Do note that banks,card network providers, airport service providers already has integration with them.Not everything is via dreamfolks.

So if competition lowers the fee its possible dreamfolks will loose their market share.

And yes it all depends on growth, growth of air passengers as well services on existing airports and new airports.