Margin beat on efficiency; volume disrupted; execution risk ahead

₹749.6 Cr revenue (+24%), but volume growth depressed by April Morbi disruption and supply constraints; price realization strong

Delivered OPM 11.5%; exceeds prior 150 bps guidance (9.3% → 10.8%). Driven by 83% capacity utilization (+11 ppts) and JV swing (₹10 Cr loss → ₹3 Cr profit)

Aligned with prior 16-17% guidance; management stated pricing is pass-through only, margin gains from operational efficiency

Management stated demand 'pretty decent' but volumes only 3% Q1; July 'not bad considering rains' but actual volume push unclear

Conditional on 83%+ capacity utilization and JV profitability. Risk: if Morbi normalizes supply, utilization could fall; premium narrowing with Morbi evident

Beat prior 150 bps guidance (9.3% + 150 = 10.8%) by 70 bps. Driven by 83% capacity utilization and ₹30 Cr JV swing, not pricing.

₹13 Cr swing vs prior Q1. Major contributor to margin expansion; sustainability dependent on demand hold.

South plant 9M sq meters, ₹350 Cr revenue potential, FY28 Q3/4 ramp. Plus ₹55 Cr debottlenecking. Not a cut/raise of prior guidance, but material new initiative disclosure.

Q1 disrupted by Morbi (3% growth). FY27 guidance mid-single digit (3-5%) unchanged; conservative but prudent given execution misses historically.

Capacity utilization improved 72% to 83%, major driver. JVs swung from ₹10 Cr loss to ₹3 Cr profit. Very confident margins sustain, targeting improvement to 12%+.

Natural gas blended: North ₹68-69, South/Morbi mid-70s. Pricing is pass-through; if it falls we'll reduce prices, but operational efficiency remains.

Yes, premium narrowed. Morbi was selling much cheaper than us; when they hiked aggressively, gap closed. But margins supported by operational efficiency, not pricing.

Margins not from pricing. 100% own production + profitable JVs = margin sustain. If prices fall, pass through benefits, but efficiency remains.

Leader has own polished tile capacity advantage. We're exposed to Morbi. Mid-single digit achievable; we've missed targets before, being cautious.

₹220 Cr South greenfield plant, 9M sq meters, Q3/4 FY28 operational. Plus debottlenecking 4-5M sq meters. Total ₹275 Cr FY27-28, 65-70% internal accruals.

Unlikely at current gas prices. Bright side: pent-up export demand when geopolitics resolves.

Target is 12%+. Currently confident on 11%+. Doing everything possible to exceed 12%.

Morbi sourcing constrained by freight. Own demand in North/South exceeds internal supply. 100% own utilization sustainable; Morbi sourcing not bottleneck.

Depends on capacity utilization and product mix. If sustained, margins maintainable and will improve as quarters unfold in Q3/4.

Approximately ₹3,700 Cr. Debottlenecking adds ₹300 Cr. South plant adds ₹350 Cr.

Many areas of discussion. Best taken offline.

Q1 was 3% disrupted; guidance conservative given execution misses; May-June demand decent but July rains headwind.

Contingent on 83%+ capacity utilization and JV profitability. Risk: if Morbi normalizes supply or demand weakens, utilization could fall.

South greenfield 9M sq meters, revenue potential ₹350 Cr, Q3/4 FY28 ramp. 65-70% internal accruals; 60-40 JV structure for financing.

Margins heavily dependent on 83% capacity utilization. If Morbi normalizes supply, competition intensifies, or demand weakens, utilization could drop to 75-80%, compressing EBITDA by 100-200 bps.

Morbi took double Somany's 16-17% price hike (32%+). Gap between Somany and Morbi narrowing materially. If Morbi pricing power improves further, Somany's realization upside constrained.

Industry leader 6% Q1 volume; Somany only 3%. Smaller players double-digit. Somany's guidance conservative (mid-single) but execution risk high if market growth accelerates.

9M sq meter plant, ₹350 Cr revenue potential, 15-month timeline (Q3/4 FY28). If macro weakens, market demand uneven, or capex delays occur, ROI at risk. Significant balance sheet commitment.

JVs swung ₹13 Cr (loss ₹10 Cr → profit ₹3 Cr) this quarter. Still loss-making on absolute basis. If macro deteriorates, reversal risk material. Key margin driver contingency.