Hindware Home Innovation Limited (HINDWAREAP) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Hindware Home Innovation Limited Q4 FY26 Earnings Conference Call hosted by Arihant Capital. As a reminder, all participant lines 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 this conference, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ronna Kostwal from Arihans Capital. Thank you, and over to you, sir.

Thank you. Good evening, and welcome, everyone. On behalf of Arihans Capital, we invite you to Hinderware Home Innovation Limited quarter-four and FY26 earnings conference call. From the management side, we have Mr. Mirupam Sahai, CEO of Box and Consumer Appliance Business, Mr. Rajesh Pajdun, CEO of Pipe Business, Mr. Tanvir Sikka, the Group CFO, and Mr. Navin Malik, CEO and CFO of Handware Home Innovation Limited. Finally, note that some of the remarks or observations made during today's call might be forward-looking, such as financial projections or statements regarding company's plans, objectives, expectations, or intentions. The company does not have any obligation to revise this forward-looking statement to reflect any further events or developments. For a comprehensive disclaimer, please refer to slide number two of the regular presentation. With that, I would now like to hand over call to the management for their opening remarks. First week, we will open first for Q&A session. Thank you, and over to you, Mr. Nui.

And welcome to Hindley Home Innovation Limited, FI 26 and Quarter 4, FI 26, and the call. Kindly note that some remarks and observations made during today's call might be found. These may include but are not limited to financial projections and statements regarding the company's plan, objectives, expectations, or intentions. The Company does not have any obligation to advise this forward-looking statement to reflect any future developments or events. For a comprehensive disclaimer, please refer to slide number 2 of the results presentation. For FI 26, the Company reported to Council. Rupees 2,520. Peace, 233 crore, and 184 crore last year. The listing is... Thank you. COVID before tax and exception item was 40 crore compared to negative 28 crore. in quarter for FY25. EBITDA for the quarter stood at Rs.63 crore vs. 51 crore last year, up 23% year-on-year, with margin at 9% compared to 7% in quarter for FY25. Profit before tax and exception item for the quarter was 15 crore as against Rs.02 crore in the corresponding quarter last year. As communicated on our previous investor calls, in a strategic move to sharpen our focus on the kitchen appliances segment, including chimneys, hawks, and cooktop, the board has approved the discontinuation of loss-making quarter categories such as air coolers, other than through the e-commerce channel, ceiling, and other fans, air purifier, water purifier, and furniture fittings. Please refer to note number 3B of this financial for further details. With that, I now hand over to Mr. Nirupam Sahai to take you to the pathway and sales business over to you, Nirupam.

Thank you, Naveem. For FY26, the pathway business reported revenue of 1,520 crores compared to 1,384 crores in FY25, reflecting a year-on-year growth of 10%. EBITDA stood at 157 crores against 121 crores last year, registering a year-on-year growth of 30%. With EBITDA margins of 10.3% for FY26, compared to 8.8% for FY25, a growth of 160 basis points. Profit before tax was 48 crores in FY26, compared to negative 1 crore in FY25, a positive year-on-year increase, with PBT margins at 3.2%. For quarter 4 FY26, the business reported revenue of 397 crores, compared to 360 crores in Q4 FY25, representing a year-on-year growth of 10%. EBITDA for the quarter stood at 38 crores versus 38 crores last year, with a year-on-year growth of 20%, and EBITDA margin of 9.5% in quarter 4 FY26 versus 8.7% in quarter 4 FY25. Profit before tax for the quarter was 11 crores, as against 2 crores in the corresponding quarter last year, with PBT margins of 2.9%. The financial figures quoted above are excluding other income and exceptional items, as reported in the earnings presentation uploaded on the stock exchanges. While the overall demand environment remained relatively subdued during Q4 amid macroeconomic softness and geopolitical uncertainties, the underlying trajectory of the business continued to remain stable. Our sanitaryware and faucets businesses delivered healthy growth during the quarter. However, the tiles business witnessed temporary supply disruptions due to fuel shortages faced by our manufacturing partners. This, in turn, impacted product availability and consequently affected sales of tiles during quarter four. At the beginning of FI26, we have clearly outlined our strategic priorities for the bathware business, and I am happy to share that we remain committed to that roadmap throughout the year. The consistent execution of these priorities helps the business deliver steady growth and improvement in profitability despite a challenging operating environment. Our strategy remained anchored around premiumization, strengthening engagement with our weighted dealer network, expanding distribution across Tier 2 and Tier 3 markets, and deep engagement with influencers. During the year, we continued to make steady progress across each of these areas, further improving market penetration and strengthening our revenue mix. Both our institutional and general trade channels delivered growth during the year, supported by expanding distribution reach and improving brand action across key markets. From a channel perspective, both institutional and general trade channels delivered steady growth during the year, despite a challenging demand environment across parts of F526. The revenue mix remained healthy with retail as a primary contributor and institutional business contributing 25%. With both channels delivering growth and supporting a balanced, diversified demand profile. Alongside this, we continue to invest in the Hindware brand as part of our long-term equity-building approach. This is now translating into stronger awareness and improving consumer preference metrics across key markets, with increasing salience relative to peers. The business also witnessed continued cost pressures during the year, particularly in fuel, brass, and other key input materials. ...driven by geopolitical developments and commodity volatility. While we undertook calibrated pricing freezes and operational efficiency measures, part of the margin improvement was offset by these inflationary pressures. Alongside growth initiatives, we also remained focused on improving operating efficiencies and strengthening the balance sheet. Through tighter receivables management, inventory optimization, and supply chain efficiencies, working capital days improved from 103 days... Thank you. As we look ahead to FY27, we remain firmly focused on driving profitable growth across the business, while continuing to strengthen execution across our strategic priorities. We have started the year on a very encouraging note with healthy momentum across key categories and markets. Based on the business momentum we are witnessing over the last couple of quarters and improving market conditions, we remain confident of delivering growth in the range of 15% to 20% in FY27, along with an improvement in margins. Turning to Hindler Home Innovation Limited, quarter 426 revenue surrect E.T. corolles with EBITDA of minus 7 corolles for FY26 revenue with 370 corolles with a negative EBITDA of 12 corolles. As communicated during our quarter 2 update, we had initiated a strategic portfolio rationalization exercise. Focused on exiting loss-taking categories and sharpening our focus on segments where we believe we have stronger market positioning and sustainable competitive advantage, particularly in kitchen appliances and water heaters. Consequently, year-on-year comparisons are not entirely like-for-like, given the discontinuation in F526 of categories in general trade, such as air coolers and fans. We continue to remain disciplined in executing this strategy through F526. Alongside this, we focused on premiumization and new product introductions across the portfolio. As a result, the business is now witnessing an improved product mix and stronger underlying profitability metrics, the benefits of which are expected to become increasingly visible from Q1 onwards. The quarter witnessed operational challenges where input cost volatility and intermittent availability of key raw materials impacted sales execution. In addition, margin performance was partially offset by continued cost inflation across key input materials, driven by geopolitical and commodity-wise pressure. FY27 will be a year of sharper execution, stronger technology integration, and focused category-led growth. As part of the strategy, we are launching our AI-enabled chimneys range, which reflects our focus on bringing smarter and more differentiated products to consumers. Over the years, we have built meaningful scale and leadership in the category, and we see a strong opportunity to further strengthen this position through continued technology adoption. You will also see innovation across our kitchen appliances and water heaters portfolios. This is aligned with our premiumization strategy, as consumers are increasingly seeking design-led, feature-rich, and technologically advanced products. We have started the new financial year on a very healthy note, with encouraging performance in April. As we continue to sharpen our focus on select high-potential categories, improve product mix, and drive operating efficiencies, we expect meaningful operating leverage to come through over the course of FY27, supporting a stronger profitability predatory. At the same time, we are seeing consumer purchase journeys evolve rapidly, with customers increasingly researching products in this space online before making buying decisions. In line with this shift, we are strengthening our positioning as a digitally-led consumer brand. To focus investments in digital marketing, content, consumer engagement, and platform visibility. Alongside this, we are also deepening our presence across modern trade, working closely with both national and regional retail partners to further expand reach, strengthen brand visibility, and improve market penetration. With that, I now hand over to Mr. Nadeesh Bajnu to take you through the pipes and fittings business. Over to you, Nadeesh.

Thank you, Nirvana. Good evening, and thank you all for joining us. FY26 was a challenging year. Raw material volatility, unseasonal rain, subdued infrastructure, spending created a difficult operating environment across the sector. In Q4 FY26, our revenue stood at 186 crores with an EBITDA of 10 crores and a negative PBT of 10 crores. And for FY26, the company reported revenue of 673 crores, EBITDA of 41 crores, and a PBT loss of 29 crores. The financial figures quoted above are excluding other income and exceptional items, as reported in earnings presentation, uploaded on the stock exchange. In Q4, the industry witnessed a sharp increase in KVC regime, with prices moving from approximately 68 rupees per kg to 114 per kg by March. This rapid escalation created a short-term demand acceleration and pricing opportunity across the market. Over the last two years, the industry, including us, had largely been operating on lean inventory level, and its continued raw material price volatility. Our strategy remained focused on maintaining working capital, discipline, and minimizing inventory-led risks during periods of sharp price correction. However, during the sudden spike in resin prices in March, due to this geopolitical affair, players carrying relatively higher inventory We're better positioned to capitalize on the surge in market demand and temporarily supplied cycles. While January and February witnessed healthy demand momentum, March was impacted by supply constraints and cautious channel behavior due to extreme raw material. As a result, despite the underlying demand conditions, we witnessed a revenue shortfall during the month of March 26th. The limited inventory availability during this period also impacted operating leverage and profitability, resulting in lower operational EBITDA and EBITDA loss for Q4. On the operational front, as shared in our previous call, the Reduki plant now became operational towards the end of January. I am pleased to share that the ramp-up is progressing as planned and the project remains firmly on track. As we move through FY27, we expect volumes from Rudiqi to scale progressively, with a more meaningful contribution anticipated in the second half of FY27 as utilization levels improve. For our business, working capital has been maintained at 90 days, and net bank debt has increased from 385 to 429 crores during the year, primarily on account of the capex expansion for the Rudiqi plant. With the expansion phase now complete, our focus in FY27 will be on driving full utilization of this capacity, improving operational efficiency. During the year, we also expanded our SKU basket and Stunson distribution reach weekly markets. As we enter FY27, we are beginning to see early signs of stability returning to the market. April was a very strong month for us, and we are seeing momentum gradually build. While we remain watchful of external factors, we are encouraged by the trajectory of demand and expect the second half of FY27 to be stronger than the first. On the strategic front, we remain focused on expanding our product portfolio, strengthening our manufacturing throughput, and improving operational efficiencies across the business. We believe the investments and initiatives underway today will further strengthen our competitiveness position and support sustainable long-term value creation for all stakeholders. With that, I will now hand it back to the moderator to open the floor for questions. Thank you all.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Maitri Shah with Sapphire Capital. Please go ahead.

Yeah, hello, I'm out of the way. Yeah, hello. Good evening. A few questions from my side. Firstly, on the growth. So, we mentioned that we're looking at a 15 to 20% growth in the pathway side, but our pipe business kind of degrew this year. We've also added capacity there, and we also exited a lot of the loss-making side and the home innovation. So, any kind of color on the growth we're expecting in these two verticals?

In consumer appliances, we are also targeting 15 to 20 percent.

Okay.

As regards pipes business, see now the prices, which I was talking about, from 68 to 140. They were stabilized at around 80%. So we are looking out for an increase of around 15 percent, 14 to 15 percent in volume.

I think 15% of all. Okay. And could you repeat what was the price increase or decrease? I couldn't hear you.

Yeah, it was around 68 rupees per kg. The raw material price was in January, and by the end of March, it was 140 rupees.

Okay. And on the home innovation side, when do you see this business turning a bit up on the table and then? That's positive. At what scale of operation do you think this profitability would kick in?

I mean, expect it in quarter one FY27 itself, and the full year will definitely be positive. So all the actions we've taken in the rationalization of portfolio, launch of new products.

And any kind of color on how do you see the pipe business growing? Like in your drivers, do you see for this 14%, 15% volume growth? Or is it on the basis of new capacity addition that now we are not constrained by capacity anymore?

See, ma'am, as we said that in January, we were doing fine. All these constraints came because of all these positions which are happening now around the world and because of the raw material volatility. We were not able to catch up with the space in the month of March because of the low inventory. And if you see now what we said in my opening remarks, that all those orders which we are carrying, we are just able to do 50% of our business, what we did in last year, March. So, we have done that in this April. We have grown in April last month by around 50%. We are still growing in this month by around 30%. So, that's why we are giving this statement that we are looking for a very positive effect.

We have grown in April by 50% to 5015.

5050.

Oh, okay, that is great. And we're able to now pass on the call, so there's no lag coming in from there.

Yeah, it's now because we could, now we could with inventories also, so we look forward for a bright future.

Okay, that is great. And we do see a lot of inflationary issues coming in and impacting the consumption of the buyers. So do you see that kind of hindering our growth for the home innovation and the barter sector, because we're mostly catering for retail side on both of these. So any sort of like headwinds we might face not achieving the growth?

So, there are obviously some cost pressures in terms of gas prices, brass prices, etc., raw material volatility. Having said that, we've taken price increases in both sanitary ware and faucets, both in January and then again in April, May. To ensure that margins do not get hit, we have not seen a major impact on sales as a result of the price increases, because it's pretty much happened across not only our industry, but across different industries. And with the growth momentum that we're seeing so far, we are confident of hitting the 15 to 20% growth number that we outlined earlier.

Thank you. That is great. And any sort of overall control margin number you would like to target for FY27 and then post that for FY28?

Yes, I think we should be able to grow by somewhere in a range of, like, 5Q4 was abnormal. Mr. Pajnu has already spoken about it. But our plan is to expand our overall margins on the business on a console, ranging 1.5% to 2% systematically at least for the next two years.

Okay, so 1.5% to 2% annually we'll be looking at today for the next two years.

Yes.

Okay, that is great. Thank you.

Thank you. Ladies and gentlemen, if you wish to ask questions, you may please press star and one on your touchstone telephone. Our next question comes from the line of Vinod Krishna with Aventus Belt. Please go ahead.

Sir, my question is regarding the bathware business. So, however, if you remember, we had a very tepid performance because of... Losing market share, not in a big way, but a good market share in both the segments. So, how is the positioning now, and if you can comment about the competitive intensity in terms of number of players, I'm not asking the name, but how is our position in both sanitary and closets, if you can go deeper in this. So, make us understand, is there any new competition, how is the growth, and what is our aim? So what are we thinking about these things?

So, we shared in quarter three that the busway business grew at 14%, and in quarter four, we just shared we've grown at 10%. That 10% was required by the fact that we didn't get suppliers of files at the end of February and March. That would have added about 2% to 3% to the growth. Seems steady.

It's the same for everybody.

Yeah, I'll repeat. Can you hear? FY26, the bathware business grew at 14%. In quarter 4, FY26, we've grown at 10%, but that was affected by non-availability of tiles from our suppliers in the end of February and March. If we had got supplies as per plan, that would have been an additional 2% to 3% of growth overall. So, we've had strong double-dated growth in quarter 3 and quarter 4. And like I said, we started this financial year well as well. So we have the growth momentum. Last year, with the kind of growth that we had overall, which is 10% for the full year, we believe that that is higher than the market growth rate. And therefore, we have gained market share FY26. With the 15 to 20% growth that we've targeted for FY27, we are again confident of gaining significant market share in this financial year. So, the confidence is high. We've grown well in both sanitary wear and faucets, and we believe that the growth momentum that we have going forward for this year, again, in both sanitary wear, faucets, and tiles, is going to be in double digits. So, we're very confident of the 15-20% growth that we've talked about. It's underpinned by strong strategic plans and very strong execution on the ground. So I think there's full confidence on the fact that we will grow ahead of the market and therefore gain market share.

Comment on the competitive intensity, how many players across segments, if you can, yes, because when we see, we see different regions, different players, so on the, at the national level, how many players do we compete with in bathware and sanitary and faucets? Yes, the number of players normally.

Yeah, so at a national level, there are five or six major players. So you have some regional players, but a large part of the industry is concentrated in the top five or six. So, the real intensity of competition across the country is among the top five or six players. You do have some regional competition, but not that significant. The good thing is the organized sector in this industry is very strong. So, basically, we do have a large proportion of sales in the organized sector, and within that, these top five, six players. I won't name the players, but basically, we have five.

But would we be in the top three, sir, in both content and penetrating?

Yes, absolutely.

And we are confident about, so you said you are confident about double-digit growth next year, so in the next two, three years also double-digit growth, and what are the factors do you think, sir, if you see, is it distribution, is it what did we do, or what are the tailwinds that we are seeing that we are confident about double-digit growth next year, and can you comment about the growth in the medium term also, and what are the factors driving like?

Yeah, so I'll talk about what has driven growth over the last couple of quarters and what is going to drive growth in this year, and that momentum will continue into the coming years because that strategy fundamentally will not change. One which I've talked about consistently is a focus on weighted dealers, so large dealers across the country. So city by city mapping of the weighted dealers, making sure that if we are present there, we increase our share of wallet, and if we are not there, we enter those counters. We did that very successfully in FY26, and we'll continue that momentum. We've seen very high double-digit growth from the weighted dealers that we focused on. So that focus will continue in FY27 and going forward. The second is in terms of increasing distribution in Tier 2 and Tier 3 towns. We focused a lot on that over the last year, and we plan to continue that momentum, so that will help to drive growth as well by deepening our penetration in Tier 2 and Tier 3. The third is in terms of premiumization, new product introductions. We've had a very successful set of new product introductions in FY26, which are contributing majorly... We are contributing to the improvement in profitability that we are seeing of 160 basis points for the year. Influencer, with Plumbers, we are actually the only bathware company which has one lakh Plumbers registered on our app. And the number of active Plumbers on the app is increasing every month. So both in terms of absolute numbers and active, which means actually contracting on the app, that has gone up dramatically over the last six months, and we continue to do that momentum. We are renewing our focus on architects, both in the institutional space as well as through the general trade. Our focus on architects and tier designers is going to strengthen in FY27 and going forward. So through a combination of focus on weighted dealers, increasing our distribution in tier 2 and tier 3 towns, premiumization and launching new products to fill gaps either at price points or in terms of consumer benefits, and deeper engagement with influencers. I think all of those have really helped us to grow. And to grow profitably will continue this year and in the medium term as well.

Sir, then the last follow-up question, when will we get back to our mid-teens margins, EBITDA margins that we used to do? Because we also, I don't know, one year back in the concoil, Sandeep G. mentioned that there's a huge gain we made in our manufacturing process in terms of reducing our wastage or something like that. Maybe I'm wrong. Better throughput. So when will we get back to our mid-teens or mid-teens is not there? We should not model our medium-term also EBITDA margins for pathway.

So, the objective that we've set for ourselves and we're confident of delivering on is a 1-2% improvement in the margin year-on-year. So, in this financial year, we've already hit EBITDA margin of 10.3%. We're confident of delivering about between 1-2% improvement in the EBITDA margin in this financial year and another 1-2% in the next year as well.

So, we will go to 15, 16 and stop there. That would be our peak, so can I, or 14. So, what would be our, where will we go and mostly answer?

Right now, I would like to talk about the outlook for the next two years, and then obviously we will re-evaluate where it can go after that.

But, yeah, so we will hit the teams within this year and next year. Can you, like, where are the margin gains coming, sir? Thank you, sir. This is the last question. Yeah, so...

Yes, so manufacturing efficiencies, so better capacity to utilize the plants, operating efficiencies of the plants which we focused on, and then launching a lot of new products at higher gross margins. The premiumization strategies that I talked about also helps in terms of profitability. So really focusing on our mid-premium and premium ranges to improve the profitability mix. So those are the two primary growth drivers in terms of profitability. Thank you, sir. Thank you.

Thank you.

Participants to ask a question, you may press star and 1. Our next question comes from the line of Yash Mantu, an individual investor. Please go ahead.

Hi, good evening, and thank you so much for taking my question. Can you, sir, can you please talk about the industry size for both sanitary and faucet wear? Because I remember you used to give that number in the presentations, but I think you have stopped giving that number. Can you please give that number?

Sanitaryware market size is roughly about 7,000 to 8,000. And the faucet market is roughly about 13,000 to 14,000 crores. So, it's a larger market.

Okay. Okay. Thank you. And when you talk about about a 15% to 20% growth in Vatware, how much would that be coming from Sanitri and how much would that be from faucet?

Everywhere will be the Philippine. Thank you. Okay, okay.

And anything, anything, any comment about the volume growth and the price growth? Because I remember we have already taken a price growth in the last quarter.

Yes, we've taken a couple of price increases over the last four months. So we are looking at, because of the premiumization and the price increases, we're looking at volume growth to be largely lower. So, the value growth that we're talking about. Okay, okay.

And can you please tell me about the customer base when we talk about Tier 1, Tier 2, Tier 3 cities, how much would that be coming from Tier 2 and Tier 3 cities especially?

Yes, so we have...

Sir, actually, I ask this because for about three years now, our real estate absorption and new launches have been going down, especially when we talk about homes that are priced lower than one throat. So, how do you think that is going to affect our company in the near term?

So, I think there is a huge amount of friction that is still happening in the metros and tier 1 and tier 2. A lot of them are at the mid-premium and premium range. So a lot of the new launches are actually at slightly higher prices than they were two or three years ago. So the trend that we're seeing in the industry is a move towards premiumization, people buying higher value products, because I think the homes that they're purchasing are at a significantly higher price than they were earlier. So we are seeing that trend, and therefore that focus on meeting that emerging consumer need of more premium products.

And is the company, I mean, I don't want to name the competitors, but isn't it true that some of the really premium brands are making inroads because of this premiumization in the real estate industry?

In general, the premium ranges of most companies are increasing in terms of size. Response to an earlier question I talked about, the top five or six players, basically, in Sanityware and faucets, I think the key is actually within these five or six companies. So we are focusing on a three-brand strategy. We have KIO, which is our premium brand, Hindware Italian Collection, which is mid-premium, and Hindware, which is Mars. So a lot of the focus is in terms of Hindware Italian Collection and KIO. Both in terms of distribution, penetration, and in terms of the new product introduction. I talked about the positive impact of that on gross margin as well. So that is really the focus, is where the cinema need is actually coming.

And so just one last question from my end. We have been talking about this sound thing in the whole industry now. So, do you think that that is something that we are going to get? Is that something that might go on for long term?

Discounts in general in this industry are not really out of line with what is there across different industries, so I don't see a significant impact of discounts on overall profitability. It's more or less in line with what is required. It's not really disproportionate.

Okay. Okay. Thank you. Thank you, Sandhya.

Thank you.

Thank you. Our next question is from the line of Fennel Brambath with Choice Institutional Equities. Please go ahead.

Hello. Am I audible?

You are audible. You may proceed.

Yeah. Yeah. So, sir, unless you mentioned some of the... Sorry, could you just speak a little louder, please?

Thank you. Yes, sir.

Hello. So, you have mentioned a couple of price hikes during the quarter. So, can you share some more lights on that, the segment-wise, or how much price hikes we have taken during the quarter, and still we are expecting any price hike in Q1 or Q2? That is my first question.

Yeah, so largely in line with the increase that we saw in the brass. That we had. So, mid-January, we took a 15% price increase in faucets, because there was a substantial increase from about 600 rupees to about 800 rupees. So, 15% hike we took mid-January, and then on 1st May, we've taken another price hike, over 3%. So, this is for faucets. On 1st February, we took a 6% increase. And then gas prices obviously went up significantly in March and April. So, mid-April, we took another 7%. So, these price increases are to ensure that margins are protected. And, yeah, I think they've been based purely on what we've seen in terms of gas prices and raw material prices. But we've taken steps at the right time to make sure that margins are protected.

Okay, so whatever, as of now, the impact we have getting from the petrochemical price and all, so this price is sufficient to tackle those impacts, or we are expecting some more price hike?

No, so at this point of time, they're sufficient. If we see more volatility in the coming weeks and months, we'll obviously have to take a call at that stage. For now, the price hike that we've taken are...

Okay, okay. You also mentioned some new launches and all with the higher margins. So, can you share some color on that, like the revenue mix and from which segments we are getting higher margins and from which region or from which market?

Yeah, so there are a couple of segments that we are focusing on, which are... Call stats is another category where we're seeing good traction and significantly higher gross margin. Then even the regular product ranges, there are products which basically have design and aesthetics which are significantly different from what is available in the market, also using raw materials. So we're launching a lot of those in faucets particularly, those also of a higher gross margin. So between smart... Toilets, between thermostats, and between these better or differentiated design and aesthetics products, better raw materials, these are the categories where we are seeing higher gross margin.

Okay. Okay, got it. My next question is on a pipe segment. Okay, so what I observed that we had a negative price realization for the segment in FI 25, 26. Please correct me if I'm wrong, even though in FI 24. So what is our expectation or management guidance on the price realization? The price will be on the same range or we can expect some higher realization in the coming quarter or the coming year, like for FY27-28. Hello. Yeah. Yeah, yeah, sure. Please go ahead.

So I'll repeat again. That is the raw material price. So the average selling prices last two years have been going down, AFPs are coming down, but there is a volume growth which is happening in the market. Now what is happening is, as I earlier said, We'll see you next time. It is demolished. Definitely.

So, you are mentioning margin. So, I think the margin is around 10% as of now for pipe segment or pipe EBITDA per kg. So, what we are expecting over there, like from 10 to what we are expecting to 12, 15 or mid-10 or what is the...

The call depends basically everything depends on where the raw material stays because if the raw material further comes down. You can only give a volume of items for that. Because your end product and your end selling price goes down.

Got it, got it. And my, the second last question, on the exceptional item which we have in this income statement side, so can you share some more color on that exceptional item or loss around 526 million and what is the management expectation on this? So it's a one-off or we can expect further into FI27 as well.

So in Q4 when we talk about the exceptional items, so one big item is relating to our impairment which has happened in the... Thank you. From HHL to Hintastica way back in 2021, so there was a goodwill of about 34, 35 crores around, which has been impaired because of the reasons that, you know, the initial plan and the current plan which we are looking at, that venture is losing money. Although there is a plan which we have now, Faster turnover on that joint venture and make it profitable, you know, in the near future. So that is one. Another hit which we took during the year was on the, you know, certain businesses which we shut down on the consumer side, you know, which were more seasonal and they were losing. And as a result of which you will see that the performance of the consumer business In terms of a substantial reduction in the operating losses, Oh, it's very visible. One of items, I think, to a large extent, if you see in the last three, four years, we had, last few years, I'll say since 2015-16, under the Hinger brand, we had launched certain new businesses. I'll say 60-70% of that businesses, let it be pipes in terms of building the turnover, let it be consumer products in terms of building the turnover, and even the expansion of our business. So, where we have not been successful in terms of ability to have created a bottom line, although they were all successful, on the top line was the seasonal businesses, like, you know, we're selling air cooters in the retail or fans business and water purifiers and air purifiers, so which has been shut. And now, from the perspective of the business portfolio, four key businesses, sanitary ware, or we call it as a bathware business. We consider us entryware and faucet business, price business, kitchen chimneys, and also these are four clear verticals where we, which we have demonstrated a growth, you know, and we continue to.

Okay, noted. And the last question on the losses from the JV, which we have adjusted for our bottom line, and that number is significantly higher for FI26. So, any pillar on that? And what we can expect for near term or next two to three years?

So, the higher quantum of loss is also on the counter of the Goodwill, which I spoke of, you know. But going forward, we are fairly optimistic that this business has good potential to grow. We had set up a factory here, which we disposed of in the month of December. So, number of actions have been done. So, you know, wherever required, you know, we optimize our operations in terms of, you know, making...

Okay. Okay. That's all from my side. Thank you so much and all the best for the coming quarters.

Thank you. Our next question comes from the line of Vinod Krishna from Aventus Wealth. Please go ahead.

Sir, thank you. And, sir, can you, any guidance on debt and how it is going to pan out over the next two, three years on both the segments combined?

So, on a combined basis, we have a net debt of 708 crores today. A big repayment is happening this year of odd 145 to 150 crores. We feel that after that 50, 60 growth, so whatever is the approval which we are generating is now going towards repayment of debt, other than the, you know, small capex, which we have to do in, you know, to further ramp up our manufacturing efficiencies and also, you know, debottlenecking our capex.

So, is there any target where we will go and stop, sir, like at 300 or 200, or we will make it debt-free?

So, I am not saying we will make it debt-free, because in the next two to three years, but definitely a substantial reduction by almost 30 to 40% should happen in the next two years. Thank you, sir, and all the best.

Thank you. Ladies and gentlemen, to ask a question, you may press star and one. Our next question is from the line of Aditya Banerjee, an individual investor. Please go ahead.

Hello, am I audible?

No, you are audible, sir. You may proceed.

Hello, thank you for the opportunity, sir. So, I have a couple of questions. So, on the demerger side, sir, what is the progress with regard to the demerger, and when do you expect listing of both entities?

So, we had approved, the board had approved in March last year, subsequent to which we got Thank you. and the formalities as prescribed under the law. We feel that this could take another two to three months, you know, in terms of getting the final court order, and after which we'll approach stock exchanges for the listing, which is another month, month, month and a half process based on our past experiences.

And on consumer plan side, you guided a 90 crore for Q4.526. 100 CR by quarter 1 F.27, and quarter 4 came in at 80 CR, actually lower than quarter 381 CR. So, what drew this sequential decline, and is this 100 CR quarterly run rate a target stick impact for quarter 1 F.27, or are you revising the timeline?

Yeah, so... In quarter four, there were issues in terms of raw materials for a couple of our categories. So the coolers that we held through e-commerce and cooktops and hops, for example, there were issues in terms of supplies. So it was more an issue around availability of raw materials for certain categories, which impacted that 8 to 10 crores, which would have got us to 90 crores. In terms of the target, basically, we will hit... The 100 crore team within quarter one and quarter two of this year. So we continue on that path of 100 crores in a quarter.

Okay, sir. And we are targeting double-digit margins over time under the outsourcing model. So what gives confidence this business can sustainably achieve such margins in a highly competitive category?

EBITDA margin in the consumer's finances business within the next two financial years, so within FY27 and FY28, it should hit that 8 to 10% EBITDA margin.

Okay, sir, and you mentioned supply-side challenges in the times business during the call. So, could you help us quantify the expected impacting quarter one specifically in terms of volume loss in millions square meter or equivalent units and revenue headwinds and any margin compression you are anticipating as a result?

10 crores in terms of non-supply of planned material that we had for tiles. In quarter one of this year, there has been improvement in terms of supplies in May. April still got impacted. So if I were to quantify the April plus May impact, then it would be about four to five crores in terms of the non-availability of material that we needed. We expect that situation to improve in the coming weeks of... The remaining nine-odd days, and in June for it to stabilize. So we should get back regular supplies from all our suppliers by June.

Okay, thank you. That's it so much.

Thank you. Ladies and gentlemen, we will take that as our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you.

Thank you, everybody, who joined on the call. I think they have been speaking. I hope we have been able to appropriately answer your queries, which are still open to, you know, any further queries you can get in touch with our investor relations agency, and always happy to interact with them. Thank you.

Thank you. On behalf of Arihan Capital, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.