Hindware Home Innovation Limited ($HINDWAREAP)

Ladies and gentlemen, good day, and welcome to the Hindware Home Innovation Limited Q4 FY '26 Earnings Conference Call hosted by Arihant Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ronak Osthwal from Arihant Capital. Thank you, and over to you, sir.

Thank you. Good evening, and welcome, everyone. On behalf of Arihant Capital, we invite you to Hindware Home Innovation Limited Quarter 4 and FY '26 Earnings Conference Call. From the management side, we have Mr. Nirupam Sahay, CEO of Bus and Consumer Appliance business; Mr. Rajesh Pajnoo, CEO of Pipe Business; Mr. Sandeep Sikka, the Group CFO; and Mr. Naveen Malik, CEO and CFO of Hindware Home Innovation Limited. Kindly 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 its forward-looking statements to reflect any further events or development. For a comprehensive disclaimer, please refer to Slide 2 of the results presentatiOn. With that, I would now like to hand over call to the management for their opening remarks, post which we will open for Q&A session. Thank you, and over to you, Mr. Naveen.

Good evening, everyone and welcome to Hindware Home Innovation Limited FY '26 and Quarter 4 FY '26 Earnings Call. Kindly note that some remarks and observations made during today's call might be forward-looking. These may include, but are not limited to, financial projections and statements regarding the company's plans, objectives, expectations or intentions. The company does not have any obligation to revise these forward-looking statements to reflect any future developments or events. For a comprehensive disclaimer, please refer to Slide #2 of the result presentation. For FY '26, the company reported consolidated revenue of INR 2,510 crores compared to 2,523 crores in FY'25. EBITDA for the quarter stood at INR 233 crores versus INR 184 crores last year, [indiscernible] of 27% with EBITDA Margin at 9% compare to 7% of earning period last year. Profit before tax and exceptional item was [INR 40 crores] compare to negative INR 28 crores in '25. FY'26 revenue reported -- consolidated revenue of INR 663 crores compare to INR 699 crores in Q4 FY '25. EBITDA for the quarter was at INR 63 crores versus INR 51 crores last year, up 23% year-Over-year with margin at 9% compare to 7% in quarter 4, FY '25. Profit before tax for the quarter was INR 15 crore. As against INR 2 crores in the corresponding quarter last year. As communicated on our previous investor call, in a strategic move to sharpen our focus on the kitchen appliances segment including Chimney, advanced hobs and the Board has approved the discontinuation of loss-making product categories such as air coolers other than through the e-commerce channel, ceiling and other fans, air purifiers, water purifiers and furniture fittings. Please refer to Note 3b of the published financials for further details. With that, I now hand over to Mr. Nirupam Sahay to take you through the Bathware and Consumer business. Over to you, Nirupam.

Thank you, Naveen. For FY '26, the Bathware business reported revenue of INR 1,520 crores compared to INR 1,384 crores in FY '25, reflecting a year-on-year growth of 10%. EBITDA stood at INR 157 crores against INR 121 crores last year, registering a year-on-year growth of 30% with EBITDA margins of 10.3% for FY '26 compared to 8.8% for FY '25, a growth of 160 basis points. Our profit before tax was INR 48 crores in FY '26 compared to negative INR 1 crores in FY '25, a positive year-on-year increase with PBT margins at 3.2%. For quarter 4 FY '26, the business reported revenue of INR 397 crores compared to INR 360 crores in Q4 FY '25, representing a year-on-year growth of 10%. EBITDA for the quarter stood at INR 38 crores versus INR 38 crores last year with a year-on-year growth of 20% and EBITDA margin of 9.5% in quarter 4 FY '26 versus 8.7% in quarter 4 FY '25. Profit before tax for the quarter was INR 11 crores as against INR 2 crores in the corresponding quarter last year with PBT margin 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 quarter 4 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 4. At the beginning of FY '26, we have clearly outlined our strategic priorities for the Bathware business, and I'm happy to share that we remain committed to that road map throughout the year. The consistent execution of these priorities helped the business deliver steady growth and improvement in profitability despite a challenging operating environment. Our strategy remains 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 traction 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 FY '26. 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 price increases and operational efficiency measures, part of the margin improvement was offset by these inflationary pressures. Alongside growth initiatives, we also remain 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 in FY '25 to 89 days in FY '26. The net bank debt also reduced from INR 308 crores to INR 234 crores during the year, reflecting stronger cash flows and continued financial discipline. Capacity utilization for FY '26 for our Sanitaryware plant stood at approximately 82%, while the faucet plant operated at 89%, supported by improving demand and operational efficiencies. As we look ahead to FY '27, 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 FY '27, along with an improvement in margins. Turning to Hindware Home Innovation Limited. Quarter 4 '26 revenue stood at INR 80 crores with EBITDA of minus INR 7 crores. For FY '26 revenue of INR 317 crores with a negative EBITDA of INR 12 crores. As communicated during our quarter 2 update, we had initiated a strategic portfolio rationalization exercise focused on exiting loss-making 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 FY '26 of categories in general trade such as air coolers and fans. We continue to remain disciplined in executing the strategy through FY '26. 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 price pressures. FY '27 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 Journeys' 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 FY '27, supporting a stronger profitability trajectory. 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 the shift, we are strengthening our positioning as a digitally led consumer brand through focused investments in digital marketing, content, consumer engagement and platform visibility. Alongside this, we're 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. Rajesh Pajnoo to take you through the pipes and fittings business. Over to you Rajesh.

Thank you, Nirupam. Good evening, and thank you all for joining us. FY '26 was a challenging year. Raw material volatility, unseasonal rain, subdued infrastructure spending created a difficult operating environment across the sector. In Q4 FY '26, our revenue stood at INR 186 crores with an EBITDA of INR 10 crores and a negative PBT of INR 10 crores. And for FY '26, the company reported revenue of INR 673 crores, EBITDA of INR 41 crores and a PBT loss of INR 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 PVC resin with prices moving from approximately INR 68 per kg to INR 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 levels amid continued raw material price volatility. Our strategy remains focused on maintaining working capital discipline and minimizing inventory-led risk during periods of sharp price correction. However, during the sudden spike in resin prices in March due to this geopolitical issues, players carrying relatively higher inventories were better positioned to capitalize on the surge in market demand and temporarily supply tightened. While January and February witnessed healthy demand momentum, March was impacted by supply constraints and cautious channel behavior due to extreme raw material volatility. As a result, despite healthy underlying demand conditions, we witnessed a revenue shortfall during the month of March '26. The limited inventory availability during this period also impacted operating leverage and profitability, resulting in lower operational EBITDA and the PBT loss for Q4. On the operational front, as shared in our previous call, the Roorkee plant now became operational towards the end of January. I'm pleased to share that the ramp-up is progressing as planned and the project remains firmly on track. As we move through FY '27, we expect volumes from Roorkee to scale progressively with a more meaningful contribution anticipated in the second half of FY '27 as utilization levels improve. For our business, working capital has been maintained at 90 days and net bank debt has increased from INR 385 crores to INR 429 crores during the year, primarily on account of the CapEx expansion for the Roorkee plant. With the expansion phase now complete, our focus in FY '27 will be on driving full utilization of this capacity, improving operational efficiency. During the year, we also expanded our SKU basket and strengthened distribution reach in key markets. As we enter FY '27, 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 FY '27 to be stronger than the first. On the strategic front, we maintain -- we remain focused on expanding our product portfolio, strengthening our manufacturing footprint 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.

[Operator Instructions] Our first question comes from the line of Maitri Shah with Sapphire Capital.

A few questions from my side. Firstly, on the growth. So we mentioned that we are looking at a 15% to 20% growth in the Bathware side, but our pipes business kind of degrew this year. We also -- we've also added capacity there. And we've also exited a lot of the loss-making side in 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%.

As regards pipes business, see now the prices, which I was talking about from INR 68 RS to 114 per kg, they have stabilized at around INR 80. So we are looking out for an increase of around 15% -- 14% to 15% in volume.

And could you repeat what is the price increase or decrease? I couldn't hear you.

Yes, it was around INR 68 per kg raw material prices in January and by the end of March, it was INR 114.

INR 114 Okay. And on the home innovation side, when do you see this business turning EBITDA positive and then PAT positive? At what scale of operations do you think this profitability will kick in?

We expect it in quarter 1 FY '27 itself and the full year will definitely be positive. All the actions we have taken in terms of rationalization of portfolio, launch of new products, premiumization, et cetera, all of them are paying off already. We expect the positive profitability in quarter 1.

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

Similarly, as we said that till 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 this space in the month of March because of our low inventory. And if you see now what we said in my opening remarks that all those orders which we were carrying, we're 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 YTD around 30%. So that's why we have given the statement that we are looking for a very positive year.

We've grown in April by 50%, 50 or 15?

50%.

Okay. That is great. And we're able to now pass on the cost. So there's no lag coming in from there.

Yes, now we are good with inventories also. So we look forward for a bright future.

Okay. 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 bathware sector because we're mostly catering to the retail side of most 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, et cetera, raw material volatility. Having said that, we have taken price increases in both sanitaryware 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. with the growth momentum that we are seeing so far, we are confident of hitting the 15% to 20% growth number that we outlined earlier.

Okay. That is great. And any sort of overall consol margin number you would like to target for FY '27 and then post that for FY '28?

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

Okay. So 1.5% to 2% annually we'll be looking at the rate for the next 2 years?

Yes.

[Operator Instructions] Our next question comes from the line of Vinod Krishna with Avendus Wealth.

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 and how is our portion in both sanitary and faucets, if you can go deeper in this to make us understand how the -- is there any new competition? How is the growth? And what is our aim like we used to say we want to grow 1.5x the growth of the industry. So how are we thinking about these things?

Yes. So we shared in quarter 3 that the bathware business grew at 14%. And in quarter 4, we just shared we've grown at 10%. That 10% was tempered by the fact that we didn't get suppliers at the end of February and March. That would have added about 2% to 3% to the growth. Seem steady growth of quarters now. And [indiscernible] that the overall that we have...

Your voice is being -- I don't know if you're -- we are not able to listen to you. It's being cut. I don't know if it's the same for everybody.

Yes, I'll repeat. Can you hear?

Yes, sir.

So in quarter 3 FY '26, the Bathware business grew at 14%. In quarter 4 FY '26, we've grown at 10%, but that was affected by nonavailability 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-digit 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 in FY '26. With the 15% to 20% growth that we've targeted for FY '27, we are again confident of gaining significant market share in this financial year. So the confidence is high. We've grown well in both sanitaryware and faucets. And we believe that the growth momentum that we have going forward for this year, again, in both sanitaryware, faucets and tiles is going to be in double digits. So we are very confident of the 15% to 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.

So sir, any comment on the competitive intensity, how many players across segments? If you can just give us -- 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 the number of players normally?

Yes. 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 players. 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 fairly strong. So basically, we do have a large proportion of the sales in the organized sector and within that, these top five, six players. I won't name the players, but basically, we have...

Would we be in the top three, sir, in both faucets and sanitary?

Yes, absolutely.

And we are confident about -- so you said you are confident about double-digit growth next year. So in the next 2, 3 years also double-digit growth. And what are the factors do you think that, 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? Or what are the factors driving that?

Yes. 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 FY '26, 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 FY '27 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 and new product introductions. We've had a very successful set of new product introductions in FY '26, which are contributing meaningfully to sales and also contributing to the improvement in profitability that we are seeing of 160 basis points for the year. Also Yes. Also our efforts in terms of deepening engagement with influencers with plumbers, we are actually the only bathware company which has 1 lakh plumbers registered on our app. And the number of active numbers on the app is increasing every month. So both in terms of absolute numbers and active, which means actually transacting on the app, that has gone up dramatically over the last six months, and we'll continue that momentum. We are renewing our focus on architects, both the institutional space as well as through the general trade, focus on architects and interior designers is going to strengthen in FY '27 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. We will continue this year and in the medium term as well.

Last follow-up question would be, 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 con call, Sandeepji mentioned that there's a huge gain, that 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 on a medium term also EBITDA margins for Bathware?

So the objective that we've set for ourselves and we are confident of delivering on is a 1% to 2% improvement in the margin year-on-year. So in this financial year, we've already hit EBITDA margin of 10.3%. We are confident of delivering about between 1% and 2% improvement in the EBITDA margin in this financial year and another 1% to 2% in the next year. So if we go to 15%, 16% and stop there? That would be the peak -- or 14%. So what would be our -- where will we go and mostly... Right now, I'd like to talk about the outlook for the next two years, and then obviously, we'll reevaluate where it can go after that. But yes, so we will hit the teens within this year and next year.

But can you -- like where are the margin gains coming, sir? This is the last question.

Yes. So manufacturing efficiencies, so better capacity utilization at the plants, operating efficiencies at the plants, which we focused on. And then launching a lot of new products at higher gross margins. The premiumization strategy 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 2 primary growth drivers in terms of profitability.

Our next question comes from the line of Yash Mantoo an individual investor.

Can you please talk about the industry size for both sanitary and faucetware? Because I remember you used to give that number in the presentation, but I think you have stopped giving that number. Can you please give that number?

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

Okay. And when you talk about above a 15% to 20% growth in Bathware, how much would that be coming from sanitary and how much would that be from faucets?

So sanitaryware will be in the early teens and faucets will be a few -- 3% or 4% higher than that.

Okay. Okay. And 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 which will be marginally lower. So the value growth that we are talking about 15% to 20% will be marginally higher than the volume growth because of the premiumization.

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 roughly about 35% of our business coming from Tier 1, roughly about 35% coming from Tier 2 and roughly about 30% coming from Tier 3.

Okay. 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 INR 1 crores. 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 [indiscernible] that is still happening in the metros and Tier 1 and Tier 2. In the metros, what we are seeing is that more 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 are 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 competitor, but isn't it true that some of the really premium brands are making inroads because of this premiumization in the real estate industry?

Yes. So in general, the premium ranges of most companies are increasing in terms of size. But in response to an earlier question, I talked about the top 5 or 6 players basically in sanitaryware and faucets. I think the key is actually within these five or six companies. So we are focusing on a 3-brand strategy. We have Queo, which is our premium brand, Hindware Italian Collection, which is mid-premium and Hindware, which is mass. So a lot of the focus is in terms of Hind Italian Collection and Queo, 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 consumer need is actually coming.

And sir, just one last question from my end. We have been talking about this discount thing in the whole industry now. So do you think that, that is something that we are going to get rid of in, let's say, a couple of years? Or is that something that might go on for long term?

So 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. Our next question is from the line of Fenil Brahmbhatt with Choice Institutional Equities.

You mentioned a couple of the...

Sorry, could you just speak a little louder, please?

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

Yes. So largely in line with the increase that we saw in the brass cost that we had. So mid-January, we took a 15% price increase in faucets because there was a substantial increase from about INR 600 to about INR 800 -- so 15% hike we took mid-January. And then on 1st May, we've taken another price hike of about 3%. So this is for faucets. It is less 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 yes, 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 are getting from the petrochemical price and all, so this price is sufficient to tackle those impact or we are expecting some more price hike?

At this point of time, they are sufficient. If we see more volatility in the coming weeks and months, we obviously have to take a call that stage. For now, the price hikes that we've taken are good enough.

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

Yes. So there are a couple of segments that we are focusing on, which [indiscernible]. In sanitaryware, we have smart toilets. So that is a category which is growing across the country, and we are also growing ahead of the market there. The other is thermostats. That is something that is increasingly being used in consumer homes now. So thermostats is another category where we are seeing good traction and significantly higher gross margin. Then the regular product ranges, there are products which basically have design and aesthetics, which are significantly from what is available in the market, also using raw materials. So we are launching a lot of those in faucets particularly. Those also offer higher gross margins. So between smart toilets, between thermostats and between these better or differentiated design and aesthetics products, better raw material these are the categories where we are seeing higher gross margin.

Okay. Got it. My next question is on the pipe segment, okay? So what I observed that we had a negative price realization for the segment in FY '25, '26. Please correct me if I'm wrong, even though in FY '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 FY '27 - FY '28?

Am I audible?

Yes, sure. Please go ahead.

So I'll repeat again. The output prices, the selling prices is directly proportional to the input price, that is the raw material price. So the average selling prices last two years have been going down, ASPs are coming down, but there is a volume growth which is happening in the market. So what is happening is, as I earlier said, from January onwards, the prices went up from INR 68. And in March, it touched around INR 114 per kg. So now it has stabilized somewhere around INR 85. So if it stabilizes at that, definitely, we are going to see a surge in average selling price per kg of the raw material and the finished products. So we will definitely see some better margins in the future. And as such, as I said, we have been already doing this very good last April and May now.

Okay. So you are mentioning margins. 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-teen or what is the...

It all depends -- basically, everything depends on what -- where the raw material stay because if the raw material further comes down, we cannot give -- we can only give a volume guidance for that. Because [indiscernible] selling price goes down.

Got it. Got it. And 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 INR 526 million? And what is the management expectation on this for FY '27, '28 or midterm? So it's a one-off or we can expect further into FY '27 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 joint venture company, which is Hintastica Private Limited. So we had done a slump sale of this business from HHL to Hintastica way back in 2021. So there was a goodwill of INR 34 crores, INR 35 crores around, which has been impaired because of the reasons that 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 to build faster turnover on that joint venture and make it profitable in the near future. So that is one. Another hit which we took during the year was on the certain businesses which we shut down on the consumer side, 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 is very visible in the P&L. So these are one-off items. I think to a large extent, if you see in last 3, 4 years, we had -- last few years, I'll say, since 2015, '16, as under the Hindware brand, we had launched certain new businesses. I'll say 60%, 70% of that business is let it be pipe in terms of building the turnover, that will be consumer products in terms of building the turnover and even the expansion of our faucets business is there. So where we have not been successful in terms of ability to have create a bottom line, although they were all successful on the top line was the seasonal businesses like we're selling air coolers 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, sanitaryware, what we call it as a bathware business, which consider of sanitaryware and faucet business, pipe business and kitchen chimneys and also these are four clear verticals where we -- which we have demonstrated a growth and we continue to grow there, and we've given the guidance.

Okay. Okay. 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 FY '26. So any color 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 account of the goodwill, which I spoke of, which is there. But going forward, we are fairly optimistic that this business has good potential to grow. The loss-making activities like we had set up a factory here, which we disposed of in the month of December. So a number of actions have been done. So wherever required, we optimize our operations in terms of making the overall growth which we have achieved on the sales over the last so many years, more profitable on the bottom line.

Our next question comes from the line of Vinod Krishna from Avendus Wealth.

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, like...

On a combined basis, we have a net debt of INR 708 crores today. A big repayment is happening this year of odd-INR 145 crores to INR 150 crores. We feel that after that INR 50 crores, INR 60 crores. So whatever is the approval which we are generating is now going towards repayment of debt other than the small CapEx which we have to do in to further ramp up our manufacturing efficiencies and also debottlenecking our cap. So [indiscernible] we are generating will go towards the repayment of debt.

So is there any target where we will go and stop like INR 300 crores, INR 200 crores or we'll make it debt free?

So I'm not saying we'll make it debt-free because in the next two to three years, but definitely a substantial deduction by almost 30% to 40% should happen in the next two years.

Our next question is from the line Aditya Bannerjee an individual investor.

Am I audible?

Yes, you may proceed.

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

So we had approved this demerger. The Board had approved in March last year, subsequent to which we got the stock exchange approval. And after that, there have been a series of court hearings and the shareholders and the unsecured creditors has also approved the scheme in their meeting held on 7th March 2026. We already filed a second motion application with the honorable NCLT of Kolkata, for which the hearing has already happened. We are -- order is, we are waiting for the order. And after that, there are a few more steps in the formalities as prescribed under the law. We feel that this may take another two to three months in terms of getting the final court order and after which we'll approach stock exchanges for the listing, which is another month, 1.5 months process based on our past experiences.

Am I audible? And on Consumer plan side you guided INR 19 crores for Q4 FY '26 with INR 100 crore by quarter 1 FY '27. And quarter 4 came in at INR 80 crore actually lower than quarter 3 INR 81 crore. So what for this sequential decline and if this INR 100 crore quarterly run-rate target still intact for quarter 1 FY '27 or are you reviving the timeline.

In quarter 4 there were issues in terms of raw material for a couple of our categories. So the coolers we sell through e-commerce and cook tops and hops, for example, there were issues in terms of supplies. It is more an issue around availability of raw material for certain categories, which impacted that INR 8 crores to INR 10 crores, which would have got to INR 90 crores. In terms of the target, basically, we will hit the INR 100 crores thing within quarter 1 and quarter 2 of this year. So we continue on that path of INR 100 crores in the 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?

I think 8% to 10% EBITDA margin in the Consumer appliances business within the next two financial years. So within FY '27 and FY '28 we should get the 8% to 10% EBITDA margin.

You mentioned supply size and this in the tile business during the call. So could you help us quantify the expected impact in quarter 1 specifically in terms of volume loss in millions square meter equivalent units and revenue headwinds and margin compression you are anticipating as a result.

So we had an impact in March of roughly about INR 10 crores in terms of non-supply of planned material that we had for tiles. In quarter 1 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 INR 4 crores to INR 5 crores in terms of the nonavailability of material that we needed. We expect that situation to improve in the coming weeks of May, the remaining 9-odd days and in June for it to stabilize. So we should get back to regular supplies from all our suppliers by June.

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 there have been a set of questions have been asked, and I hope we have been able to appropriately answer your queries. Still open to any further queries you can get our -- get in touch with our Investor Relations agency and always happy to interact through them. Thank you.

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