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Cera Sanitaryware Limited Q4 FY2024 Earnings Call Summary
Earnings Performance • Revenue: INR 547 crore, a 2.6% increase YoY. • Profit After Tax: INR 75 crore, up 19.2% from Q4 FY23. • EBITDA: Increased by 11.2% to INR 109 crore. • EPS: Increased to INR 57.69 from INR 48.39.
Market Outlook • Q1 FY2025: Anticipated sluggish demand due to general elections and extreme weather. • Long-term Sales Target: Recalibrated to INR 2,900 crore by March 2027 (16.02% CAGR). • Segment Performance: • Sanitaryware: 2% decline • Faucetware: 10% growth • Wellness: 21% growth • Tiles: 10% decrease
Strategic Initiatives • Luxury Segment Focus: Launching new products and brand stores. • New Product Development: Contributed 30-35% of total revenue. • Greenfield Project: Land acquisition expected by June 2024, operations in 18 months at INR 125-130 crore.
Operational Highlights • Imports from China: INR 10 crore, 1.8% of sales; aim to reduce reliance. • Production Capacity: Faucetware facility at 90% utilization, monthly capacity of 4 lakh pieces. • Retailer Loyalty Program: Over 19,300 retailers enrolled, contributing to 37% of retail sales.
Financial Management • Capital Expenditure: INR 25.4 crore for FY 2024-2025 focused on plant upgrades. • Cash Reserves: INR 828 crore, a 20.5% increase YoY. • Dividend Declared: INR 60 per share.
Challenges and Competitive Landscape • Market Conditions: Muted demand in sanitaryware and tiles attributed to overall subdued market conditions. • Competitive Pressures: New entrants struggling due to lack of manufacturing and dealer networks.
Future Projections • Revenue Growth: 16% CAGR anticipated over the next three years. • Capacity Utilization: Sanitaryware segment at 82%. • Advertising Budget: Projected at INR 63-65 crore for the upcoming fiscal year.
Management Insights • Margin Maintenance: Operational efficiencies have helped maintain margins without price increases. • Talent Retention: Introduction of an ESOP scheme to motivate employees. • Market Size Estimates: Sanitaryware at INR 9,000-10,000 crore; faucetware at INR 14,000 crore.
Earnings Call Overview • Date: February 13, 2024 • Transcript submitted to BSE and NSE on February 17, 2024 • Focus: Performance for the quarter ending December 31, 2023
Market Challenges • Sales Decline: 4.2% year-over-year decrease • Key Markets Affected: Notable challenges in Delhi and Kerala • External Factors: Inflation, interest rate hikes, and adverse climatic conditions
Financial Performance • Revenue: Rs. 437 crore (down 4.2% YoY) • Profit After Tax: Rs. 51 crore (down 9.7%) • Cash Reserves: Increased by 29% to Rs. 768 crore • EBITDA: Decreased due to higher advertising and promotional expenses
Strategic Initiatives • Premiumization Focus: New products accounted for 32% of total sales • Capacity Expansion: Faucetware facility increased to 4 lakh pieces/month • New Plant: Greenfield sanitaryware plant expected operational in 18 months (investment of Rs. 125-130 crore)
Cost Management • Raw Material Costs: Fluctuations in China clay and feldspar • Operational Efficiency: Improved to offset cost pressures • Sustainability Commitment: 80% of energy needs met through renewable sources
Future Outlook • Revenue Targets: Unchanged for FY25, with optimism for recovery driven by real estate demand • Advertising Expenses: On track to meet previous guidance • Inventory Levels: Stabilized among dealers, with expectations of improved sales
Capital Expenditure and Expansion • Capex: Approximately Rs. 41 crore spent on expansion • Sales Contribution: Additional 1 lakh pieces/month projected to generate Rs. 240 crore annually • Land Acquisition: 75% of land for new sanitaryware project acquired
Management Insights • Dividend Policy: Plans for strong dividend payout and potential buybacks • Market Share: No negative impact from divestment of Anjani Tiles; CERA outperformed competitors • Local Duties Impact: Increased stamp duties in Kerala affecting consumer sentiment
Conclusion • Management expressed gratitude to participants and encouraged further inquiries. • Disclaimer noted potential transcription errors and the company's lack of responsibility for them.
Cera Sanitaryware Limited Q2 FY24 Earnings Call Summary
Earnings Call Submission • Date: November 8, 2023 • Transcript submitted to BSE and NSE • Call held on November 2, 2023
Company Performance Highlights • Revenue Growth: 11.43% year-on-year • Gross Margin: Decreased from 55.78% to 52.72% • EBITDA: Increased by 13% • Chinese Imports: Significant reduction in reliance
Strategic Objectives • Enhance product offerings • Increase market share • Maintain stable pricing for 17 months
Operational Efficiency • No price hikes implemented in Q2 FY24 • Focus on operational efficiency to enhance profitability • Mitigated raw material cost increases through improved manufacturing efficiency • Lower gas prices from GAIL reduced costs
ESG Commitment • 94% of energy needs met through renewable sources
Retailer and Product Initiatives • Retailer Loyalty Program: Over 16,500 retailers engaged • New Product Launches: 699 new products in FY23 • Increased advertising expenditures for brand visibility
Financial Overview • Revenue: INR 462 crore (11% increase) • EBITDA: INR 74 crore (12% increase) • Cash Position: Cash equivalents rose to INR 751 crore • Stable demand despite inflationary pressures
Sales Composition • 3% from commoditized soluble salt tiles • 15% from double charge tiles • 25% from wall tiles • High-end tile business limited to 10-12% of topline
Capacity and Growth Strategies • Faucetware capacity expansions completed • Sanitaryware operating at 91% capacity • Average selling price improved without price increases for 17 months
Growth Outlook • Medium-term growth target: 19% to 21% • Focus on new products and consumer acceptance • Export potential currently at 1-2% of sales, with plans for expansion
Segment Performance • Sanitaryware segment growth of 27% for FY23 compared to FY22 • No price increases planned to maintain market share and gross margins
Conclusion • Optimistic about steady growth despite potential moderation • Emphasis on operational efficiencies and strengthening top dealers • Encouragement for further inquiries from participants
Cera Sanitaryware Limited Q1 FY24 Earnings Call Summary
Earnings Highlights • Revenue Growth: 8% increase to INR 427 crore (from INR 396 crore in Q1 FY23). • EBITDA: Rose by 11% to INR 68 crore. • Profit After Tax: Increased by 40% to INR 56 crore. • Sales Breakdown: • 53% from sanitaryware • 35% from faucetware • 11% from tiles • 1% from wellness • Premium Product Sales: 45% of total sales.
Operational Insights • Capacity Utilization: High in manufacturing facilities; faucetware expansion nearing completion. • Product Launches: 699 new products introduced in FY23; plans for continued launches. • Advertising Expenses: Decreased to INR 11.02 crore from INR 11.74 crore year-on-year. • Inventory Days: Increased slightly to 74 days; net working capital days rose to 72 days.
Future Growth Strategy • Revenue Target: Aiming for INR 2,900 crore by September 2025, driven by strong replacement demand (65% of sales). • Retail Strategy: Plans to double brand stores; significant dealer investments in exclusive showrooms. • New Plant: Sanitaryware greenfield plant projected cost of INR 130 crore; production expected 18-24 months post land acquisition.
Market Dynamics • Faucetware Growth: Expected to be the primary growth driver; sanitaryware growth anticipated to be flat or below 10%. • Tiles Business: Fully outsourced; viewed as complementary with no significant growth emphasis. • Raw Material Prices: Brass prices decreased; stable pricing maintained due to strong brand.
Competitive Landscape • Pricing Strategy: No recent price hikes; last increases in May 2022 and November 2021. • Market Share: Strong position in faucetware; competitive dynamics remain high among established players.
Financial Management • Bad Debt: INR 5.5 crore attributed to normal business practices. • Capital Expenditures: Planned financing through operating cash flow without incurring debt.
Closing Remarks • Outlook: Optimistic for steady growth; management expressed gratitude for participant interest and invited further inquiries.
Cera Sanitaryware Limited Q4 FY2023 Earnings Call Summary
Financial Performance • Revenue Growth: 24.6% year-on-year increase, reaching INR 1,796 crore for FY23. • Q4 FY23 Revenue: INR 530 crore, up 21% year-over-year. • Profit After Tax (PAT): Increased by 21% to INR 63 crore in Q4 FY23. • Gross Margins: Stable at 53.26% in Q4 FY23, with an annual increase from 52.77% to 54.25%.
Strategic Focus • Product Premiumization: Emphasis on premium products leading to improved margins. • Manufacturing Capacity: High capacity utilization and expansion in faucetware production. • Price Strategy: No price hikes in Q4 FY23, contrasting with competitors.
Market Position and Expansion • Dealer Network Growth: Increased from 4,260 dealers in March 2022 to 5,462 in March 2023. • Retailer Engagement: Over 14,000 retailers involved in loyalty programs. • Target Markets: Focus on Tier 2 and Tier 3 cities for luxury products.
Future Outlook • Revenue Target: Aiming for a run rate of INR 2,900 crore by September 2025. • Capital Expenditure: INR 34.78 crore planned for FY24, focusing on automation and customer touchpoints. • CAGR Goal: Targeting 17% to 18% revenue CAGR over the next three years.
Shareholder Returns and Investments • Increased Cash Distribution: From INR 46 crore to approximately INR 65-66 crore. • Greenfield Project: Estimated cost of INR 25 crore for land acquisition, with an additional INR 100 crore for plant and machinery. • Brownfield Expansion: Nearing completion, adding 12 lakh pieces per year at a cost of INR 69 crore.
Management Insights • Competitive Edge: Success attributed to innovative product development and strong governance. • Pricing Strategy: Minimal price hikes in FY23; no plans to reduce prices despite raw material cost fluctuations. • Dividend Policy: Increased payout ratio, with no current proposals for buybacks.
Cera Sanitaryware Limited Q3 FY2023 Earnings Call Summary
Earnings Call Overview • Date: February 3, 2023 • Transcript submitted to BSE and NSE on February 9, 2023.
Key Highlights • Strong Demand and Capacity Utilization • Sanitaryware: 105% • Faucetware: 115% • Production Expansion • Faucetware capacity to increase to 4 lakh pieces/month by March 2024. • Funded through internal cash flow.
Financial Performance • Revenue Growth • Revenue reached INR 456 crore. • 33.3% increase in profit after tax year-over-year. • Cash Reserves • 14% increase in cash and cash equivalents. • Current cash reserves around Rs. 600 crore.
Pricing and Product Strategy • Price Adjustments • Slight increase in sanitaryware prices; decrease in faucetware prices. • New Product Launches • New products surged from 67 in Q3 FY22 to 614 in Q3 FY23 (39% of topline). • Retailer Loyalty Program • Engaged over 13,500 retailers, enhancing sales and data on consumer preferences.
Operational Efficiency • Manufacturing Strategy • Focus on high-end products in-house; low-end products outsourced. • Target inventory levels of 80-90 days. • Advertising Expenditure • Increased from Rs. 32 crore to Rs. 55 crore to enhance brand visibility.
Future Outlook • Growth Targets • Aiming to double revenue over the next 40 months. • Capital Expenditure Plans • FY23 capex budget: Rs. 24 crore (only Rs. 3 crore spent). • FY24 capex planned at Rs. 69 crore.
Market Position and Challenges • Segment Growth • Sanitaryware: 19% growth; Faucetware: 12% growth. • Price Rationalization • Minimal price changes implemented to manage margins effectively.
Management Insights • Dividend Policy • Future dividend payouts to be evaluated by the Board post-annual results. • Retail Loyalty Program Impact • Incentivizes retailers and aids in inventory management and product development.
Conclusion • Management expressed confidence in growth trajectory and operational strategies, emphasizing strong market position and favorable macroeconomic conditions.