Cera Sanitaryware Reports Q1 Revenue Growth Despite Margin Pressures

Cera Sanitaryware reported a strong rise in first-quarter revenue for fiscal 2027, according to Investing, though profit growth lagged as higher input costs and temporary disruptions squeezed margins. Revenue from operations climbed 19.5% year-over-year to INR 486 crores from INR 407 crores in the corresponding quarter of the previous year.

Revenue Growth and Financial Overview

Despite the top-line expansion, EBITDA (excluding other income) fell to INR 49.2 crores from INR 53.1 crores in the prior-year quarter. The EBITDA margin narrowed to 10.1% compared to 13.1% a year earlier. Profit after tax slipped to INR 45 crores from INR 47 crores, while earnings per share came in at INR 35.15 compared to INR 36.08 previously. Market reaction reflected the margin pressures, with shares trading down 4.15% at INR 6,062 compared with the previous close of INR 6,324.5.

Segment Performance and Operational Drivers

The revenue growth was broad-based across retail and project channels, driven primarily by strong volume growth in key product segments. Segment performance breakdown includes:

* Sanitaryware: Grew 14% year-over-year, accounting for 47% of total revenue. Volume growth contributed about 10 percentage points, alongside a 2% price impact and a 2% favorable mix. Capacity utilization stood at 61% during the quarter. * Faucetware: Grew 25% year-over-year, contributing 40% of total revenue. Volume growth contributed approximately 18 percentage points. Capacity utilization reached 96%. * Tiles: Increased 22% year-over-year, representing 11% of total revenue. * Wellness: Declined 7% year-over-year, comprising 2% of total revenue.

According to Deepak Chaudhary, VP Finance and Investor Relations, pricing actions taken in March and May 2026 have been well-absorbed by the market, achieving cumulative price increases of 12% in sanitaryware and 16% in faucetware. Furthermore, the net working capital cycle improved sharply, falling to 50 days from 75 days year-over-year. Inventory days decreased from 80 to 68, receivables dropped from 38 to 30 days, and payables increased from 43 to 48 days. Cash and cash equivalents stood at INR 943 crores as of June 30, 2026.

Margin Pressures and Temporary Factors

Explaining the margin dilution despite robust revenue growth, management noted that the Q1 margin of 10.1% was impacted by several one-time and transitional factors totaling approximately 4.35% of revenue. These factors included a one-time wage settlement, a period of single-kiln operation, the lower-priced closure of old project contracts, and delayed price realization.

On a normalized basis, management stated that the EBITDA margin would have been around 14.5%, much closer to historical levels. Additional cost pressures included a rise in the weighted average gas cost to INR 48.43 per cubic meter in Q1 FY ’27 from INR 33.17 per cubic meter in Q1 FY ’26, accounting for approximately 3.3% of revenue. The company also faces ongoing uncertainty in raw material prices, with brass prices rising to INR 900 per kg.

Outlook, Guidance, and Strategic Investments

Looking ahead, Cera maintained its full-year FY 2027 revenue growth guidance at 18% to 20% and its absolute EBITDA margin guidance at 13.5% to 14%. Management noted that an accounting change moving turnover discounts from expenses to deductions from revenue lowers the base, which will make the margin percentage look slightly higher on an adjusted basis.

NVE (NVEC) Q1 2027 Earnings Call Transcript — Photo: fool.com

While Q2 will continue to feel the effect of project contract transitions, a stronger recovery is expected from Q3 onward as price increases are fully reflected across channels. Faucetware capacity expansion is expected to begin contributing in Q4 FY 2027. Additionally, the company plans to invest approximately INR 85 crores in brand-building and marketing during FY ’27, allocate roughly INR 43 crores for capital expenditure, and expand its Sanitare flagship store network to about 50 stores by the end of FY ’27, up from 35 stores.