ORIENTBELL - Orient Bell

📊 NSE: ORIENTBELL 🏢 Ceramics - Tiles / Sanitaryware 📅 Last Updated: 12/14/2025 10:45

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for Q2 FY26 grew by 3.0% YoY, recovering from a weak Q1. For the full fiscal year 2025, revenue remained stagnant at INR 672 Cr compared to INR 677 Cr in FY24 (a 0.7% decline) due to demand moderation and intense competition. The vitrified tiles segment provides better traction and premium pricing compared to ceramic wall tiles.

Geographic Revenue Split

Not disclosed in available documents, though the company maintains a diversified geographical reach across India with key manufacturing plants in Sikandrabad (North), Hoskote (South), and Dora (West).

Profitability Margins

Gross margin improved significantly to 39% in Q2 FY26, representing a 250 bps increase YoY. This was driven by a 3.7% reduction in manufacturing costs through operational efficiencies. Operating margins are projected to be 5.0-5.5% in FY26, up from 4.4% in FY25 and 3.4% in FY24.

EBITDA Margin

EBITDA margin in Q2 FY26 increased by 100 bps compared to Q2 FY25 and 80 bps compared to H1 FY25. The margin recovery is volume-led as the company focuses on building operating leverage to offset high fixed costs and marketing spends.

Capital Expenditure

The company undertook capital expenditure in fiscal 2024 which was completed for a lower-than-expected amount, leading to lower debt utilization. Specific INR Cr values for future capex were not disclosed, but management monitors debt-funded capex closely to maintain a healthy financial risk profile.

Credit Rating & Borrowing

CRISIL reaffirmed 'CRISIL A/Stable' for long-term and 'CRISIL A1' for short-term facilities. Borrowings stood at INR 36.5 Cr as of September 30, 2025. Interest coverage ratio was 6.2 times in FY25 and is expected to improve to over 8 times in FY26.

⚙️ Operational Drivers

Raw Materials

Natural gas is the primary variable cost, alongside clay and minerals for tile manufacturing. The company also sources traded goods, which accounted for a higher portion of sales in FY24, impacting margins.

Import Sources

Not disclosed in available documents, but manufacturing is concentrated in Sikandrabad (Uttar Pradesh), Hoskote (Karnataka), and Dora (Gujarat).

Key Suppliers

The company has long-term tie-ups with gas authorities for its Sikandrabad and Hoskote plants.

Capacity Expansion

Current blended capacity utilization was 68% for manufacturing in Q2 FY26. The Sikandrabad 'mother plant' is performing at higher levels, while the South (Hoskote) and Dora plants are operating at lower utilization rates.

Raw Material Costs

Manufacturing costs were reduced by 3.7% on a like-for-like basis in Q2 FY26. Gas prices remain a critical variable; management indicated that if gas prices remain constant, gross margins of ~39% are sustainable.

Manufacturing Efficiency

Operational efficiency gains contributed to a 250 bps increase in gross margins in Q2 FY26 despite no increase in Average Selling Price (ASP).

Logistics & Distribution

The company utilizes a wide network of dealers and retailers; however, specific distribution costs as a percentage of revenue were not provided.

📈 Strategic Growth

Expected Growth Rate

4-5%

Growth Strategy

Growth will be achieved through volume-led expansion rather than price increases. Strategies include aggressive marketing (3.8% of revenue), the launch of a new adhesive business (started July 2025), and improving capacity utilization from the current 68% to capture operating leverage.

Products & Services

Ceramic wall tiles, vitrified tiles (including premium ranges), and tile adhesives.

Brand Portfolio

Orient Bell

New Products/Services

Launched a tile adhesive business in late July 2025. While currently contributing only a few million INR per month, it is expected to have attractive gross margins and provide a clear financial picture by Q3 FY26.

Market Expansion

Focus on increasing market reach through TV advertising and brand building. The company is targeting volume growth in a market where H2 is historically stronger than H1.

Market Share & Ranking

The company is an established player in the tiles industry, consistently ranking in the top 2 or 3 for gross margins over the last 5-6 years.

Strategic Alliances

The company has operational linkages with its wholly-owned subsidiary, Cestrum Enterprises Private Limited (CEPL).

🌍 External Factors

Industry Trends

The tile industry is currently facing intense competition from both organized and unorganized players. There is a shift toward premiumization through vitrified tiles, which Orient Bell is pursuing to improve realizations.

Competitive Landscape

Key competitors include Kajaria and Somany. While peers have historically maintained EBITDA margins of 14-15%, Orient Bell is currently operating at lower levels (6-8%) and focusing on 'repairing' these through volume growth.

Competitive Moat

Moat is built on an established brand name, a diversified distribution network, and high manufacturing efficiency (39% gross margins). Sustainability depends on maintaining cost leadership and successfully scaling the new adhesive segment.

Macro Economic Sensitivity

Demand for tiles is highly sensitive to the real estate cycle and overall GDP growth. Moderation in demand led to stagnant revenue of INR 672 Cr in FY25.

Consumer Behavior

Shift toward branded products and premium vitrified tiles is a key trend affecting demand.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to environmental norms regarding kiln emissions and gas usage. The company transitioned its ERP system in FY24, which caused temporary operational issues.

Taxation Policy Impact

Tax expenses for Q2 FY26 were INR 0.7 Cr, with a Profit After Tax (PAT) of INR 3.2 Cr.

⚠️ Risk Analysis

Key Uncertainties

Volatility in natural gas prices poses a significant risk to the 39% gross margin. Failure to achieve volume growth could prevent the company from realizing necessary operating leverage, keeping EBITDA margins subdued below 5%.

Geographic Concentration Risk

The company has a diversified reach, but underutilization of the South (Hoskote) and West (Dora) plants suggests a regional imbalance in demand or operational efficiency.