Orient Bell Limited (ORIENTBELL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Orient Bell Ltd. Q1 FY27 earnings conference call.

As a reminder, all participant clients will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Suryashraman. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and thank you for joining us today. We have with us today the Senior Management Team of Orion Well Ltd., Mr. Aditya Gupta, Chief Executive Officer, and Mr. Anu Jaroda, Chief Financial Officer, who will represent Orion Well Ltd. on the call. The management will be sharing the key operating and financial highlights for the quarter ended 30 June 2026, followed by a question-and-answer session. Please note, this comment contains some of the forward-looking statements, which are completely based upon the company's beliefs, opinions, and expectations as of today. These statements are not a guarantee of the company's future performance and involve unfortunate risk and uncertainty. The company also undertakes no obligation to update any forward-looking statements to reflect developments that offer after the statement is made. I now hand over the conference to Mr. Aditya Guptata. Thank you and over to you.

Thank you. Good evening, ladies and gentlemen, and welcome to our quarter one F527 earnings call. Over the years, OBL has focused on three key priorities. Driving demand generation, strengthening our brand, and simplifying tile selling with our cutting-edge digital and AI tools. We have built a tech-driven ecosystem comprising platforms such as PMT for project tracking, Luxury for Market Working, OVL Connect App for Dealers, OVL Exeggative App for Sales Team, and Durpan, which is a graphical MIS tool available across functions and levels, and also our unique AI-powered visualization tool, Instalook. These tech-driven initiatives have gained traction with the sales system. For instance, dealers showcase 50,000 new tile designs every month using Instalook. They are using this tool also to send out quotations to customers. 2,000-plus new projects are added every month to PMT, which is our project management tool. Widgets to 6,000 mapped influencers is tracked every day through Luxia. And there are many, many more such examples. Some of these tools were launched over 7 years ago, and some are recent. All of them have accumulated valuable data across multiple areas of our business. This structure of data enabled us to take the next step with the launch of our AI chatbot Grishti. Grishti leverages our extensive data repository to provide sales team with granular, actionable insights. In July alone, Grishti has answered almost 10,000 questions for our sales team. And this always-on analytic tool is helping identify and address new opportunities. All our efforts, including 24 by 7 advertising on TV, are designed to generate inquiries and preference for OPL. Our demand generation initiatives have ensured a sellout of approximately 40% of the primary sales volume in quarter one. Versus 26% sellout last year. The sellout support is helping us command a better price and collect faster. Our DSO has improved by 5 days in Q1. Operating environment for the industry has been volatile, as you all know, and the geopolitical developments in Middle East continue to create global uncertainty. Q1 saw a big gap in supplies as Mordi operations were shut down during April and most of May. The gap was bridged by organized players like OBL and at drawdown of dealer energy levels. The current operating environment favors branded players like OBL and especially those with a lower dependence on Mordi as a production center. While near-term volatility persists, we are positive on the long-term outlook. Housing infrastructure and renovation demand are strong structural growth drivers. If exports open up, it would lead to a big boom for the industry. To summarize, our initiatives over the last few years are now translating into outcomes with revenue growth and margin improving quarter on quarter. We will continue to focus on what is in our control with execution to drive revenue growth and profitability. Thank you. I will now hand over to Anuj, our CFO, who will take you through the detailed financial performance.

Thank you, Aditya, and good afternoon, everyone. As Aditya highlighted, our continued focus on range of growth initiatives is bringing to deliver results. With the benefits becoming increasingly visible in the momentum building quarter on quarter. Let me take you through the financial performance now. Overall volume grew by 22.9% while revenue increased by 42.8% year on year to 203 crores, supported by an ASP increase of around 15.9%. We were able to effectively pass through the increase in input cost, while the higher contribution from our own manufacturing business provided an additional benefit to gross margins. As a result, we achieved our highest severed gross margin of 39.7% during this quarter. At the operating level, EBITDA increased to 17.6 crores from 5.6 crores in corresponding period last year with an EBITDA margin of 8.7%. The EBITDA margin expanded by 480 BIPs as compared to the same period last year. Profit before tax also improved significantly to 11.2 crores compared to a loss of 0.6 crores last year. Importantly, profitability continues to grow ahead of revenue, driven by improvement in realisation, operating leverage, and enhanced manufacturing efficiencies. We also remain focused on strong cash flow generation and disciplined working capital management during the quarter. Our working capital cycle further improved to 18 days from 20 days sequentially, reflecting our continued effort to enhance operating efficiency, optimized inventory and receivable, and maintain a lean balance sheet. From a balance sheet perspective, the company remains debt-free, supported by a strong cash position and liquid investments of over 47.7 crores net of debt. This robust financial position provides significant flexibility to pursue further growth opportunities while maintaining a disciplined and prudent approach to capital allocation. On the manufacturing front, capacity utilization improved to 73% compared to 64% in Q4. We plan to invest around 10 crores to convert 1 million meters of existing ceramic capacity to GVT. This is in line with our disciplined approach to capital allocation, where we prioritize maximizing the utilization of our existing assets before investing into incremental capacity. The conversion will also enable us to improve our asset utilization, enhance our product mix, and capitalize on the growing demand of premium products. Overall, the continued improvement in profitability, cash generation, manufacturing efficiency, and balance sheet strength gave us confidence that the business is well positioned to deliver sustainable and profitable growth going forward. With this, I request moderator to open the floor for Q&A.

Thank you. Thank you very much. We will now begin with a question and answer session. Anyone who wishes to ask a question may press star and then one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use hand fits while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star and then one now. Your first question comes from the line of Guneet Singh with Counter-Cyclical PMS. Please go ahead.

Hi, sir. Congratulations on a good set of numbers. So, how much of a price hike did we take in Q1 as compared to, say, Q4 or Q1 last year?

So, Thank you. In totality, we have taken a price increase of around 18-19% within this pre-war situation, and we were able to basically get almost all of that.

Got it. So now that the gas prices have fallen because of, I mean, the Middle East situation getting better, so will we still, are we still able to sustain these higher prices or, I mean, have we taken any cuts in Q2 or do we plan to take any price cuts?

As of now, the situation is very volatile. The gas prices continue to remain volatile. Availability of propane is still not, people are not very sure of the continuity of availability of propane. So as of now, there are no price cuts that we have taken. We will continue to watch the market and decide which is the gas prices going ahead.

So, what were the gas prices in Q1 for us on average?

On an average, it was around 60 rupees.

And how are they currently?

So, currently also there is not much drop there, one or two rupees here and there, but currently those prices are currently sustaining.

Got it. And I mean, if tomorrow the gas prices go down, then we would have to take price cuts, or do you think that we would be able to sustain these higher prices? What's your take on that, given the current demand and supply dynamics?

It all depends on how the industry works, how the prices move within different geographies. Price cuts happens only in Morbi, happens all across. It all depends on that. So, too early to tell you that what will happen in the future.

Got it. And in Morbi, did we see any plant shutdowns in Q1? And, I mean, how is the situation there?

So plant shutdowns were there from, I think, end of March till mid of May, then the plants were shut down then. But post that, the supply situations have resumed and there is no problem in terms of availability of gas or propane. So currently... The plants are running at capacity in Morbi. Initially, there were some problems, initially, on account of gas, then on account of labor. But post-15th of May, I think the supply situation has improved.

Got it. And currently, I mean, with the higher prices, I'm sure Morbi place would also have high grade prices. So, what kind of a premium do we, I mean, how much higher are our prices as compared to the Morbi players?

I mean, it depends on product to product, but so the gap between our prices and Morbi prices have come down. So, if it was, say, the gap between us and them was, say, for example, Rs. 100. The gap has come down to 50, 50, 55 rupees, so which is a positive for organized players like us, and... There's one more thing which is playing out, which is good for the organized player is that, other than, so one advantage that organized players have is the advantage on account of this gap being reduced between Morbi as well as organized player. The other thing that is increasingly... Visible is that the dealers are basically looking at their sourcing by adding additional suppliers to their city, and they don't want to be dependent on, say, one geography like Morby, because of what has happened recently. They want supply security, and that's the reason they are adding more geographically, more sourcing locations.

Got it. And in terms of demand, I mean, what were the main drivers of 23% higher volumes? And if we look at, I mean, project completions and end user demand for us, so do you think that, I mean, we touched through this?

See, there are basically two broad buckets, two broad reasons because of which we have seen an increase in demand. One of it is what is happening in the market. We all know that Moldy was shut down for half of quarter one, and that did create a supply vacuum, a supply gap in the industry. Which is something which we, with our lower than most companies' dependence on Moody, we benefited from that. That was one part of driving the 23% growth. The second part would be unique to OVL. That would be because of our sustained efforts on demand generation. See, what happened is when prices were going up with a lot of uncertainty, the dealers were not very sure about stocking up. They always thought that prices would come down to 15 days later or, you know, next month and so on and so forth. But with all the work that we have been doing on Demand Generation, our teams were able to go to the dealers and tell them that, look, it's a great deal. Whatever you are buying from me, I am going to ensure that 35-40% of that I am selling out in your name through projects, through our online e-commerce. So that has also helped us, we just felt very secure, knowing that, you know, almost 40% of what they were buying from us would be sold out by the company's team itself. So their inventory levels were not getting blocked, their capital was not getting blocked. So this, this, plus whatever we are doing on the brand side, we have been... We have been on TV 24 by 7 for more than a year now. So all these factors come put together, helps us get to this 20% volume growth.

Correct, sir. Now, with the Morbi supply coming in, I mean, the growth in volumes might not be that much, but with your initiatives that you've taken, I mean, is there some kind of a volume growth that you are looking at for the current financial years?

So, we have consistently stayed away from providing any future guidance, and... More so at this point of time, when things are so volatile, the news from Middle East changes almost every few days. So we will stay away from that. But I think what I would like to tell you is that we are very sharply focused on some of these input KPIs, which we are driving, which is in terms of You know, as I said, our own initiatives, internal initiatives to generate secondary sales of how our dealers are stocking up, how our dealers are using our tools for reaching out to more customers. And we continue to see a good growth rate in those input KPIs. So from these indicators, the early indicators, we are kind of optimistic and confident that We will continue to grow strong.

Got it, sir. Thank you very much. I'll join Barbecue. I wish you all the best. Thank you.

Thank you. A reminder to all the participants, if you wish to register for a question, please press star and then watch. Your next question comes from the line of Ashwat Rajan with Arihant Capital Markets Limited. Please go ahead.

Thank you for the opportunity, and I congratulate the management on a good set of numbers. My first question is on the Dooha plant. I just want to understand what kind of numbers, utilizations, and some specifics on the thing. If you could help us share some detail or share some color on the thing.

So, Ashwalt, good evening to you. Ashwag, we have, you know, we, we... We very often produce in a particular plant and move it to another plant of ours to sell from there for that market. So, you know, that's why a plant level capacity utilization is actually misleading because it might go down dramatically in a quarter for a simple reason that we decided not to produce that product in that plant. But I think if you are the, you know, Dora expansion, for the last three years, the logic with which we have done that was to focus on the South and the West markets. So maybe I think you will get your answer if I tell you how South and West markets have been performing for us. That would help you more and give you a better handle on this other than... So, I am talking about the retail business, I left the enterprise business out of this, so our south business grew by about 37% in volume in quarter 1, our west business grew by about 60% in volume. So... Growth has been faster, growth has been stronger in these two territories where, historically, OBL has been underrepresented. This is a good sign for us, augurs well for the future.

Okay, thank you, sir, for that. Just to further on the Dura plant only, I wanted to understand what percentage of our GBT today is supplied from the Dura plant one, and if you quantify on its EBITDA levels, that would be really helpful, or its contribution to the EBITDA.

So, I think, so we have about, you know, 47% by value of our sales in quarter one was GBT. So, I think about 15 to 20% of that would be coming from Dora. And balance, bulk of the sales would be coming from SKD. And there will be a very small percentage, maybe 4-5%, low single yield percentage would be sourcing out of Morbi.

And could you also help us with our blended utilization levels, what it was for financial year 26 and what it is for Q1?

So, capacity utilization last year was 60% blinded, which is 73% in this quarter.

So, we have a headroom to grow, Ashwar, so I think that's one positive, that there is a headroom to grow, and one of the lines which we were using sporadically, we have decided to convert that ceramic line. We have decided to convert that into GVT, which would, you know, further help drive our capacity utilization in Caller 3, Caller 4.

Just a question on our project and retail split. There was some outlook on the industry of an uptick in the retail on the project part of the entire dynamics. I just wanted to understand Orient Bell's outlook on the same and what kind of percentage split are we looking at on the project end going forward?

We have historically been strong on projects, and we do projects both through our direct team, which is a key account management team, the enterprise team, and also through our dealers. So, you know, we have historically in all calls kind of taken a split of, I think, 3,000 meters and above as a project where a lot smaller projects get done through retail. So, if we have to do this play, I think for quarter one, our project was 18 percent, which includes projects which we have done to retail, greater than 3000 meters, build volume, and also the projects which have been done by key account management. To your second question about what is our lookout, I think we have grown faster for the last few quarters, not just quarter one, but actually last financial year also, our growth has been faster in the retail segment than in the enterprise segment. This is something which we are focusing on now, and we plan to build up some extra value volumes from the enterprise, which is a large builder segment. But we don't have a target percentage, so to speak, that this will be 80, that will be 20, or whatever.

Okay, sir. Understood. And one last question I have on the inflation of gas. Have we absorbed the entire brunt in quarter one or do we see a drag in the next quarter as well?

I didn't understand the question, Ashwath. So, the

gas cost, the inflation gas cost, do we foresee this to pertain in Q2 as well, or do we see a larger chunk of it settled in Q1?

I think it looks like that the bulk of the price increases on gas seems to have happened in quarter-1. Now, it is kind of more or less stable, as Anuj was saying, that maybe one or two rupees end there, a few percentage points end there. So, as of now, we see stability, but, you know, as mentioned before, is anybody's guess what happens in the larger world, what happens in Iran, and we are now seeing for last few weeks how... How refineries in Russia are being destroyed, and I believe they have lost one-third of the refining capacity, and what impact it will have going forward is like anybody's guess. But given the situation so far, I think July, I would say that gas prices have been close to what we had in Qataba.

Okay. Thank you for being here. I'll pull back to the phone.

Thank you. Your next question comes from the line of Apoorwa Sharma with Raas Capital. Please go ahead.

Hello, am I audible? Yes. Congratulations everyone for the great set of results. Some operating leverage we have been waiting for since a very long time now. So my first question would be, this quarter, we had a benefit of both price volume and the price hike that we discussed in last quarter. And in last quarter as well, I think we briefly discussed that the effect of the price hike doesn't sustain for more than three, four, maximum five months. But now looking at the macro events, it still looks like the price situation is here to stay for maybe another one, two quarters. Are we still on the track of maintaining these prices, the hikes that we have taken up?

Yes, we are. So far, so good. But as I said before, we are watching the market. We don't want to get logged into a position if the market changes in a certain direction. Then we would follow suit, but as things stand today, we are more or less on course, on course to retain the margins. Okay.

Sir, another thing, our gas contracts are with Gale, GSPC, or both of them?

With Gale. What I have understood... In Morbi, our GVs tie-up with Gujarat Gas for that outside of Morbi, it is all with Gas Authority of India.

Okay, what I have understood through some of the manufacturers in Morby, that once the gas prices, which was 42-44 per cubic, in these times, have even gone up to 69. I think the last week rate has slid up a bit. Now, given the situation in Morby, what does the north side of gas prices usually fluctuate at? I just wanted to understand the kind of the kind of gas hikes we had in Morbi. How does it work in the north side where our Sikandrabad plant is right now?

So Sikandrabad, before the war, the prices were somewhere in the range of 44-45 rupees. And currently they stand at 60, 62 rupees. Again, it's a formula based depending on your usage in the preceding six months. They say that they have a formula that till this level they'll give you at the... Rates, the prevailing basis, the brand rate, beyond that, there are spot rates that apply. So broadly, from 44-45 to 60-62 rupees is how they are booked from pre-war to the current levels. Cool.

Apurvasa, do you have any further questions? Mr. Sharma, do you have any more questions? Since there is no response from the current participant, we'll move on to our next question. But before we take the next question, a reminder to all the participants that you may press star and then one to ask a question. Your next question comes from the line of Sagar Japtab from Marine Research. Please go ahead.

Hello. Congress is on state set of numbers. Thanks for the opportunity. I had only one question. In Morbi in last 5-6-1-12 war happened in freight freight going up. In Morbi exporter, current ground activity, any chances to require export?

Any chances to? What is your question? Sorry, any chances to?

Yes.

Tagus, can you repeat your question?

Right.

Yes.

In the last 5-6 months, the Gulf War happened, and trade rates had drastically increased. Scholar current have any chance to hit market?

I'm sorry, your voice is gargoyed up. I cannot understand the question. Something about it.

Are you talking about how is X-Force doing currently?

Yes, sir.

So exports, so whatever data that we have for the first couple of months for the year, exports is down, which was somewhere around 1,500 to 1,600 crores a month. April was somewhere around 500 crores, and May was somewhere around 1,000 crores. So averaging 800 crores in the first two months of the year. And because of the elevated trade cost and this geopolitical tension in West Asia, the export market continues to be down primarily in the regions like Gulf and all, where the trade costs have actually gone up from at least five to six times.

Okay, I'll see you next week.

Thank you. Participants, to ask a question, you may press star and then one. The next question comes from the line of Saurabh Jain with Sequent Investment. Please go ahead.

Hi, Saurabh. Good evening. Congratulations on a good set of numbers. Can you give guidance for revenue of 527 and EBITDA margin for this year?

As a policy, we do not give any guidance for future.

And for margin?

Yes, same, same, same. Both for top line and margin, we do not provide guidance.

So, like we mentioned earlier that we don't give any future guidance. However, we are encouraged with the continued case momentum and the performance trend over quarter on quarter for last three, four quarters. We continue to focus on strengthening our input parameters, like Aditya mentioned, related to demand generation, customer engagement, market penetration, and all these parameters currently, the KPIs that we track are currently showing positive results, so we are hopeful that this year will perform better, but no particular number or guidance. Thank you very much.

Thank you. Our next question comes from the line of Ashwat Rajan with Arihant Capital Markets Limited. Please go ahead.

Thank you, Tim, for the follow-up. I had a few questions on one. I just noticed we do have a significant amount of cash on our balance sheet. I believe it's around 75 CR. Just wanted to understand the management's outlook on where can we productively use. The carriage that we're sitting on at this moment.

Good morning, everyone. Yeah, we are going to be on. What we should be doing in terms of expanding our manufacturing capabilities. So that is something which we are engaged in now. And hopefully we would have decided over the next two or three months and we would be able to answer you. But broadly speaking, the cash that we are holding is something which we want to invest back into the business. Exactly where is your question that we are trying to debate internally?

You planned to get an icon? Hello?

Sure, sir, can you repeat your question?

Yeah, I just said, you said, hello.

Is it better? Yeah, you are audible.

Yes, sir. Sir, I just asked, on the 15th year capex, you said this would be on a new plant, or would this be for maintenance?

So, for example, we are converting one of our underutilized ceramic lines into GVG. That's one capex. We are changing from digital printing machines and all. We are adding some polishing machines and all that. So, balancing equipment and equipment that we feel that the DPM that we have, we want to replace it with the latest models to kind of drive product enhancement. So, this is all we are doing. So, that is, but that is, let's say, about 15-0 close. Which will go from this. The larger part of this money that we have on our balance sheet, we want to invest it into the business and we have various options that we are debating between. We will announce it to the market, I guess, for the next 3-4 months.

And, sir, on our tile adhesive front, we see a must-wound SKU kind of thing on our PPT presentation. So, I just wanted to understand what kind of progression do we have from here on that, and what kind of investments have we made going ahead?

So, yeah. So, Ashut, we have done two and a half crores in quarter one. We started on a very small scale. It is a 100% cash and carry business for us. And we have been kind of working on the product mix and all of that. So, a slow start. No major capital expenditure because we have not invested in a plant of our own. So, nothing very big on that. But the way Viltrified tiles are taking up and with our dealers reach across the country, we want to build this particular product quarter on quarter.

We have been steadily working upon increasing the geographies. So we started with a select geography in North, and now we are focusing to scale it up to North India as well as some part of East in the current year.

And another question I have on the price hike that the industry has taken as a whole, do we foresee this to pertain ahead on the price hike front, or what kind of trajectory are we looking at?

That's a difficult one to kind of answer. The performance across companies seems to differ quite a lot, even among the listed companies. So, difficult to say what strategies they will take going forward. Welcome to the call. Only thing which I can say is that our strategy will be A, watch the market, and if there is a softening of price, of selling price, then we have to be competitive. So we are very clear about that. We will keep a close watch on what happens in the market. And we will focus on our internal initiatives which I have talked about, things like tile card, demand generation, brand building, digitalization and all, to pick up market share. So that is our strategy. Be competitive and then work on your internal processes to pick up volume share.

Okay. And one last question. Just wanted to understand the last four years have made some incremental investments on the pathway front. So just wanted to understand, do you have an outlook on putting to pathway in any way?

Actually, we don't have any plans to enter Batfair. Our focus remains...

Thank you. A reminder to all the participants, you may press star and then 1 to ask a question. As there are no further questions from the participants, I now hand the conference over to Mr. Aditya Gupta for closing comments.

Thank you. Thank you for giving your time and look forward to meeting you a couple of months later, I think October end.

Thank you. On behalf of Ori and Bell Limited, that concludes this conference. Thank you, everyone, for joining us and Human Hour Disconnect Alliance. Thank you.