Orient Bell (NSE:ORIENTBELL) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Orient Bell Limited Q1 FY 'twenty seven Earnings Conference Call. 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. Please note that this conference is being recorded. I now hand the conference over to mister. 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 Orient Bell Limited, mister, chief executive officer and mister Anujaroda, chief financial officer, who will represent Orient Bell Limited on the call.

0:51 The management will be sharing the key operating and financial highlights for the quarter ended 06/30/2026, followed by a question and answer session. Please note this call may contain 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 unforeseen risks and uncertainties. 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 Gupta. Thank you, and over to you. Thank you. Good evening, ladies and gentlemen, and welcome to our quarter one FY 'twenty seven earnings call.

1:42 Over the years, OBM has focused on three key priorities: driving demand generation, strengthening our brand and simplifying client selling with our cutting edge digital and AI tools. We have built a tech driven ecosystem comprising platforms such as TMT for project tracking, flagship for market working, OVL Connect app for dealers, OVL executive app for sales team and Dirkan, which is a graphical MIs tool available across functions and levels, and also our unique AI powered visualization tool Instaloop. These tech driven initiatives have gained traction in the sales system. For instance, dealers showcase 50,000 new tile designs every month using InstaLook.

2:32 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 map influencers is tracked every day to lecture, and there are many, many more such examples. Some of these tools were launched over seven years ago and some are recent. All of them have accumulated valuable data across multiple areas of our business. This structured data enabled us to take the next step with the launch of our AI chatbot, Vrishti. Vrishti leverages our extensive data repository to provide sales team with granular actionable insights.

3:20 In July alone, VHD 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 20 fourseven advertising on TV, are designed to generate inquiries and preference for OBM. 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.

4:07 Our DSO has improved by five days in quarter one. 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 and molding operations were shut down during April and most of May. The gap was raised by organized plays like OBM and our drawdown of dealer inventory levels. The current operating environment favors branded players like OBL and especially those with a lower dependence on Moldi and the production center.

4:55 While near term volatility persists, we are positive on the long term outlook. Housing infrastructure and innovation 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.

5:43 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 INR $20.03 crores, supported by an ASP increase of around 15.9%. We were able to effectively pass through the increase in input costs, while the higher contribution from our own manufacturing business provided an additional benefit to gross margins.

6:32 As a result, we achieved our highest ever gross margin of 39.7 during this quarter. At the operating level, EBITDA increased to INR 17.6 crores from INR 5.6 crores in corresponding period last year with an EBITDA margin of 8.7%. The EBITDA margin expanded by four eighty bps as compared to same period last year. Profit before tax also improved significantly to INR 11.2 crores compared to a loss of INR 0.6 crores last year. Importantly, profitability continues to grow ahead of revenue, driven by improvement in realization, operating leverage and enhanced manufacturing efficiencies.

7:23 We also remain focused on strong cash flow generation and disciplined working capital management during the quarter. Our working capital cycle further improved to eighteen days from twenty days sequentially, reflecting our continued effort to enhance operating efficiency, optimize inventory and receivables 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 INR 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.

8:11 On the manufacturing front, capacity utilization improved to 73% compared to 64% in Q4. We plan to invest around INR 10 crores to convert 1,000,000 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 benefit strength give us confidence that the business is well positioned to deliver sustainable and profitable growth going forward.

9:08 With this, I'll request moderator to open the floor for Q and A. Thank you. Thank you very much. We will now begin with the question and answer session. You may press star and then 2. Participants are requested to use handsets 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 1 now. Your first question comes from the line of Puneet Singh with Counter Cyclical PMS. Congratulations on a good set of numbers.

10:10 So how much of a price hike did we take in Q1 as compared to, say, Q4 or Q1 last year? So in totality, we have taken a price increase of around 18% to 19% vis a vis prewar 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?

10:57 So as of now, the situation is very volatile. The gas prices continues to remain volatile. Availability of propane is still not people are not very sure of that the continuity on availability of propane. So as of now, there are no price cuts that we have taken. We'll continue to voice the market and decide this is the gas prices going ahead. So what were the gas prices in Q1 for us on average? On an average, it was around INR 60. And how are they currently? So currently, also, there is not much drop there, INR 1 or 2 here and there. But currently, those prices are currently sustaining.

11:49 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 will be able to sustain these higher prices? What's your take on that given the current demand and supply dynamics? And... It all depends on how the industry works, how prices moves within different geographies. Price cuts happens only in Mobi, happens all across. It all depends on that. So too early to tell that what will happen in 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, the plants were shut down then.

12:44 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 Mobi. Initially, there were some problems initially on account of gas, then on account of labor. But post May 15, I think the supply situations have improved. Got it. And currently, I mean, with the higher prices, I'm sure more be placed 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 more be placed? So the gap between our prices and Mobi prices have come down.

13:39 So if it was so if it was, say, the gap between us and them was, say, for example, 800, the gap has come down to INR $5,050.55. 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 online player is that other than so one advantage that the organized players have is the advantage on account of this gap being reduced between Morby as well as organized players. The other thing that is increasingly visible is that the dealers are basically are looking at diversifying 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 supply security.

14:42 And that's the reason they are adding more geographically more sourcing in their 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 touch through with it? So see, there are basically two broad buckets two broad reasons because of which we have seen increase in demand.

15:30 One of it is what has happened in the market. We all know that Moldi was shut down for half of quarter one. And that did create a supply vacuum supply gap in the industry, which is something which we with our lower than most companies' dependence on more the benefited from that. That was one part of one part driving the 23% growth. The second part would be unique to OBM. 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.

16:26 They always thought that prices would come down fifteen days later or 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, whatever you're buying from me, I'm going to ensure that 35%, 40% of that are selling out in your name through projects, through our online tile e commerce initiative, TileCart. So that has also helped us. He has felt very secure knowing that almost 40% of what they are buying from us would be sold out by the company's team itself. So their inventory levels are not getting blocked. Their capital was not getting blocked.

17:20 So this plus whatever we are doing on the brand side, we have been on TV twenty four seven for more than a year now. So all these factors come put together, helped us get to this 20% volume growth figure. Got it, sir. Now with the Mobi 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 year? 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, 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 the for reaching out to more customers.

18:47 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 strongly. Got it, sir. Thank you very much. I'll join back with you. I wish you all the best. Thank you. You. A reminder to all the participants, if you wish to register for a question, please press star and then 1. Your next question comes from the line of Ashwat Rajan with Arihant Capital Markets Limited. I congratulate the management on a good set of numbers.

19:51 My first question is on the plan. I just wanted to understand what kind of numbers, utilizations, and some specifics on the sales, if could help us share some detail or share some color on the sales? So, Ashwat, good evening to you. Ashwat, 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 on that market. So that's why a plant level capacity utilization is actually misleading because it might go down dramatically in a quarter for the simple reason that we decided not to produce that product in that plant. But I think if you are the Dora expansion for the last three years, the logic with which we had done that was to focus on the South and the West market.

20:50 So maybe I think you'll 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 the utilization number at Dora, which is not okay. I'm talking about the retail business. I've led the enterprise business out of this. So our South business grew by about 37% in volume in quarter one. Ledge business grew by about 60% in volume. So our growth has been faster, growth has been stronger in these two territories where historically OVL has been underrepresented.

21:43 This is a good sign for us, always well for the future. Okay. Thank you, sir, for that. Just to further on the Dura plant only, wanted to understand, like, what percentage of our GBT today is supplied from the product 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 47% value of our sales in quarter one was GBT.

22:30 So I think about 15% to 20% of that would be coming from Dora. And the balance bulk of the rest would be coming from SKD. And there will be a very small percentage, maybe 4%, 5% low single digit percentage to be sourcing out of. Sir, And could you also help us with our blended utilization levels? What it was for for last year '26 and what it is for q one? So capacity utilization last year was 60%, right, which is 73% in this quarter.

23:19 We have a headroom to grow, Ashwat. So I think that's one positive that there is headroom to grow. And one of the lines which we were using sporadically, we have decided to convert that that was ceramic line. We have decided to convert that into GBT, which would further help drive our capacity utilization in quarter three, quarter four. Okay. Just a question on our project in retail split. There was some outlook on the industry of an uptick in the retail on the project part of the entire dynamics.

24:10 So 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? Well, sure. See, we have historically been strong on projects, and we do projects both through our direct team, which is our key account management team, the enterprise team and also through our dealers. So we have historically in all calls, we're kind of taking a split of, I think, 3,000 meters and above as project, but now smaller projects get done through retail. So if we are to do this play, I think for quarter one, our project revenue was 18%?

24:59 Project was 18% and... 18%, which includes projects which we have done through retail, greater than 3,000 meters build volume and also the project which has been projects which are being led 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 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.

25:52 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 grant in quarter one? Or do we see a drag in the next quarter as well? Didn't understand the question, Ashut. What do mean by the lag? 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?

26:42 I think it looks like that the bulk of the price increases on gas seems to have happened in quarter one. Now it is kind of more or less stable, and Anuj was saying that maybe INR 1 or two in there, a few percentage points are in there. So as of now, we see stability. But as mentioned before, if anybody's guess what happens in the larger world, what happens in Iran and we are now seeing for last few weeks how refineries in Russia are being destroyed and I believe they have lost onethree of the refining capacity and what impact it will have going forward is like anybody's guess.

27:33 But given situation so far, I think July, I would say that the gas prices have been close to what we had in quarter one. Okay. No. Thank you for taking it. I'll go back. Thank you. Thank you. Your next question comes from the line of with RAS Capital. Please go ahead. Hello. Am I audible? Yes. Yes. Yeah. Congratulations, everyone, for the great set of results. Some operating leverage we have been waiting for since 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.

28:24 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 looking at the the macro events, it 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 kind of 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 to to on course to retain the margins.

29:23 Okay. So another thing, our gas contracts are with Gale, GSPC, or both of them? With Gale. Gale. What what I have understood, is... I just for Mobi, it is always gas authority of India. Okay. So we are I mean Okay. What what I've understood through through some of the manufacturers in Morbi that once the gas prices, it was $42.44 per cubic has... And and these trends have even gone up to 69.

30:10 I think the last week rate has slide up a bit. Now given given the situation in Morby, what what does the the North side of gas prices usually fluctuate at? We we we didn't get that question, both. No. No. 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 where our Sikhindrabad plant is right now? So Sikhindrabad, before the war, the prices were somewhere in the range of INR 44 crores, 45 crores. And currently, they stand at 62 crores. Again, it's a formula based depending on your usage in the preceding six months. This is that they were formula that till this level, they'll give you at the rates prevailing basis, the Brent rate. Beyond that, there are spot rates that apply. So broadly, from INR 40.45 to $66.02 is the how they are moved from pre war to the current levels.

31:29 Cool., sir, you have any further questions? Mister Sharma, 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 from Marine Research. Please go ahead. Hello. Congress on set set of number. Thanks for.

32:15 I had only one question. In Modi in last five six one twelve for happening site rates going up. In Morby exporter current ground activity. Any chances to require export? Any chances to... What is your question? Sorry. Any chances to Yes. Okay. Could you repeat question? Sorry. Audible? Yes. In more than five, six months, wealth war happened and trade trade at address... In Greece. Any chances to hit market?

33:06 I'm sorry. Your voice is garbled up. I cannot understand question. Something about... Are talking about the how is exports doing currently? Yes, So exports in so whatever data that we have for first couple of months for the year, exports is down, which was somewhere around INR 1,500 crores to 1,600 crores a month. April was somewhere around INR 500 crores and May was somewhere around INR 1,000 crores.

33:53 So averaging INR 800 crores in the first two months of the year. And because of the elevated trade cost and then this geopolitical tension in West Asia, the export market continues to be down, primarily in the regions like The Gulf and all, where the freight costs have actually gone up from at least five to six times. Okay. Week. Okay. Thank you. Participants, to ask a question, you may press star and then one.

34:42 Your next question comes from the line of Saurabh Jain with Sequium Investment. Please go ahead. Hi, Saurabh. Good evening. Congratulations on a good set of numbers. Can you give a guidance for revenue of five twenty seven and EBITDA margin for this year? As a policy, we do not give any guidance for future. And for margin? Yes, 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 sales momentum and the performance trend over quarter on quarter for last three quarters.

35:35 We continue to focus on strengthening our input parameters, like Aditi 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 a guidance for the balance of the year. Our next question comes from the line of Ashwat Rajan with Orient Capital Markets Limited.

36:23 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 cash that we are sitting on at this point? Yes. There are some small CapExes we are currently undertaking over the next four, four, five months and all, which will cost us maybe broadly about INR 15 odd crores, which will be internally financed.

37:10 That's one big thing. Secondly, we are actually looking at the next year of growth. We are looking at what and where we should 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?

38:03 You plan to get echo note ready? Hello? Hello? Am I audible? Ashu, sir, can you repeat your question? Yeah. I just said Ashu, you hello? Sir, can you hear me? Me? Hello? Hello? Is it better? Yes. You are audible. Yes, sir. Sir, I just asked on the fifteen year CapEx, you said this would be on a new plant or would this be for maintenance? No, no, no. So this is for example, I just spoke about we are converting one of our underutilized ceramic lines into GVD. That's one CapEx.

38:48 We are changing some digital printing machines and all. We adding some polishing machines and all that. So balancing equipment and equipment that we feel that the DPM that we have, you 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 just about INR 15 odd crores, which will go from this. The larger part of this money that we have on our balance sheet, we are we want to invest it into the business, and we are we have various options that we are debating between. We will announce it to the market, I guess, over the next three, four months.

39:39 Okay. Got it. And, sir, on our tile adhesive front, as we see a must want 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 let me see. So Ashut, we have done 2.5 crores in quarter one. We started 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.

40:25 No major capital expenditure because we have not invested in plant of our own. So nothing very big on that. But the way which we find times are taking up and within our dealer 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. Okay, sir. And another question I have on the price hike that the industry has taken as a whole.

41:17 Do we foresee this to pertain ahead on the price hike front? Or what kind of trajectory are we looking at? Or do we see to sustain... See, 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 strategy they will take going forward. But only thing which I can say is that our strategy will be, a, watch the market.

42:03 And if there is 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 happened in the market. And we will focus on our internal initiatives, which I've talked about, things like 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. Okay. And one last question.

42:51 Just wanted to understand a lot of our peers have made some incremental investments on the software front. So I just wanted to understand, do you have an outlook on foreign to hardware in any way? So currently, we don't have any plans to enter hardware. Our focus remains strengthening on our Adhesive segment, which is closely allied to tile ecosystem, and we see significant opportunities there. So as of now, focusing on Okay. Okay. Thank you, sir. Thank you for taking my questions. Thank you. A reminder to all the participants, you may press star and then one to ask a question.

43:58 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 mean, up to my end. Thank you. On behalf of ORIENTBELL Limited, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines. Thank you.