Cera Sanitaryware Limited (NSE: CERA) Q3 2025 Earnings Call dated Feb. 12, 2025
Corporate Participants:
Devrishi Singh — Investor Relations, CDR India
Deepak Chaudhary — Vice President, Finance and Investor Relations
Vikas Kothari — Chief Financial Officer
Analysts:
Archana Gude — Analyst
Mithun Aswath — Analyst
Praveen Sahay — Analyst
Ritesh Shah — Analyst
Resha Mehta — Analyst
Udit Gajiwala — Analyst
Samyak Jain — Analyst
Akshay Chheda — Analyst
Onkar Ghugardare — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY ’25 Earnings Conference Call of Cera Limited. 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 the conference call, 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 Dave Rishes Singh of CDR India. Thank you, and over to you, Mr Singh.
Devrishi Singh — Investor Relations, CDR India
Thank you. Good morning, everyone, and thank you for joining us on Limited’s earnings conference call for the 3rd-quarter and nine months of the financial year 2025. The earnings of this period were announced yesterday.
We have with us today the management team comprising Mr Vikas, CFO; and Mr Deepak Chaudhary, VP, Finance and Investor Relations. We will start with brief opening remarks from the management, following which we will open the call for Q&A.
A quick disclaimer before we begin. Some of the statements made in today’s conference call may be forward-looking in nature and a detailed note in this regard is contained in the results documents that have been shared with all of you earlier.
I would now turn the call over to the management for their opening remarks. Thank you, and over to you, sir.
Deepak Chaudhary — Vice President, Finance and Investor Relations
Thank you. Good morning, everyone. On behalf of the management team of Limited, I would like to welcome you all to our earnings conference call. I will begin by sharing some updates on the operation and strategy, following which our CFO, Mr Vikarth Kothari, will run you through the key financial highlights.
In Q3 FY ’25, while we initially witnessed early signs of demand improvement, market conditions remain challenging as persistent headwinds continued to suppress growth. As a result, demand did not pick-up as expected previously, despite these headwinds, we achieved a 2.9% year-on-year growth, increasing revenue from INR437 crores to INR449 crores. EBITDA for the quarter stood at INR71 crores, reflecting a 5.2% degrowth on Y-on-Y basis.
Our sanitaryware and faucetwear segments contributed 50% and 37% to our revenues with the B2B segment gaining traction even as retail demand remains subdued. Our strong brand equity, diverse product portfolio, operational discipline and inherent strengths help us navigate most of these macro-led demand challenges to a large extent, reducing the impact that would otherwise have been more significant, our flagship brand continues to demonstrate resilience and is expected to sustain its growth trajectory in the long-run.
At the same time, we continue to take necessary initiatives to strengthen our presence in the growing luxury segment. With emerging as a new horizon alongside Lux. These brands cater to evolving consumer preferences with a diverse range of offerings, including Red Tot award-winning electronic toilets, designer art basins, colorful sanitaryware and faucet fixtures, diverters and high-performance and a comprehensive range of wellness products such as Oxy Spa and air and water massage bathtubs.
Our product development efforts are progressing well and in Q3 FY ’25, we successfully developed 158 new SKUs in the brand and launched 104 new SKUs under the Serra brand. Alongside continuous innovation, we are expanding our exclusive store network and enhancing product displays. By the end of 2025, FY ’25, we aim to establish 20 to 25 exclusive connector stores and thereafter, we’ll establish another 50 stores in the following year, enabling scaling up to 75 stores by FY ’26. In existing stores, we are ramping-up displays with large products set to be showcased in over 100 existing stores by the end of next year. Further, we are strengthening our tile offerings with a focus on high-end value-added products, including large 6×4 slabs.
While our expansion in the luxury segment will take some time to translate into significant results, we are confident that our strategic efforts will position us well to capitalize on its long-term growth potential of this segment expansion of our manufacturing capacity to-4 lakh units per month continues to yield positive results with utilization rates improving sequentially. We see strong replacement demand in this segment, which presents a significant growth opportunity. While demand in the sanitarywear segment has remained subdued in the recent months, we are confident that the growth trajectory will regain momentum as the overall market environment improves.
The B2C segment has been sluggish, but with evolving consumer preferences, urbanization trends and the gradual recovery in the real-estate combined with regular cycles of renovation and upgradation, we expect demand to pick-up over-time. The union budget announced on February 1, 2025, introduced several positive measures aimed at boosting consumer sentiment and discretionary spending. The reduction in income taxes rates are expected to enhance disposable income, thereby increasing homebuyer’s affinity to spend and hence stimulating demand in the building materials industry.
Additionally, the allocation of INR15,000 crores under the Swami fund to complete stalled housing projects is anticipated to accelerate the completion of over 1 lakh housing units, further supporting the real-estate sector. These initiatives are expected to positively impact market demand for our products on the production front, our focus remains on optimizing production efficiency and balancing inventory. Per capacity utilization stood at 91%, while connectivay capacity utilization was 90% during the quarter. These levels ensure that we are well-positioned to meet anticipated demand in the future.
Our planned capex for FY ’25 stands at INR25 crores with INR15 crores already deployed during nine months FY ’25. These investments are directed towards manufacturing enhancements, retail experience improvements and IT infrastructure advancements, all aimed at strengthening our operational efficiency and product quality.
Our advertising and marketing spend for the quarter stood at INR14 crores as compared to INR22 crores in Q3 FY ’24. The company continues to deep the benefits of the sustained efforts it has undertaken in this area over the years. Our brand ambassador, Kiara Advani, along with our advertising type line set-up, this is your pace play it your way, has played a key role in enhancing brand recall, while targeted advertising across multiple platforms ensures widespread visibility.
Additionally, we have increased increasingly leveraged social media platforms such as LinkedIn, Instagram, Facebook and YouTube to reach niche audiences. Collaborations with social influencers have further amplified our brand presence, driving deeper engagement and increasing visibility among younger digitally savvy consumers. The retailer loyalty program remains a key initiative in strengthening our engagement with channel partners.
As of Q3 FY ’25, we have enrolled 23,000 plus retailers with more than 4 lakh invoices recorded under the program. Retail sales-linked to the program contributed to 42% of the total retail revenue, reinforcing a strong retailer engagement. While demand in the B2C segment remains sluggish, the B2B segment continues to gain momentum, contributing 35% of the Q3 FY ’25 revenues. This shift underscores our ability to cater to institutional buyers, developers and large-scale projects, reinforcing Cera’s position as a preferred brand in the industry. Maintaining an optimal mix of B2C and B2B sales remains a priority, allowing us to enhance sales predictability while capitalizing on diverse market opportunities.
To summarize, Q3 FY ’25 continued to reflect a sluggish demand environment. However, as we are reaching the end-of-the fiscal year, we anticipate closing the year with a lower single-digit growth only. Going-forward, is strategically positioned to capitalize on the anticipated recovery, our diverse product portfolio, continuous introduction of new SKUs and extensive dealer networks enable us to meet evolving customer preferences effectively.
With over four decades of industry expertise, a well-established brand, strong management, a robust balance sheet and disciplined financial practices, Terra remains committed to upholding strong corporate governance. Furthermore, our in-house manufacturing and R&D capabilities strengthen our capability — our competitive edge, ensuring we are well-equipped to navigate short-term challenges and create long-term value for all stakeholders.
With this, I would like to hand over to Mr Vikash Pothari, our CFO, who will present the operational and financial highlights for the quarter ended 31st December 2024. Thank you and over to you, Mr Kotharic.
Vikas Kothari — Chief Financial Officer
Thank you, Veepak. A very good morning to everyone. I will now provide a brief overview of the company’s financial performance for the quarter and nine months ended 31st December ’24. In Q3 FY ’25, revenue from operations stood at INR449 crores as against INR437 crores in Q3 FY ’24, registering an increase of 2.9%. EBITDA excluding other income in Q3 FY ’25 stood at INR59 crores on the same lines as Q3 FY ’24. EBITDA margins excluding other income for the current quarter stood at 13.2% as against 13.6% in Q3 FY ’24, registering a marginal decrease of 40 basis-points. This decline in margin was mainly on account of increased operating expenses, which is partially offset by favorable publicity spends.
While gas prices remain favorable during the quarter, the average gas price from GAIL was INR28.29 per cubic meter in Q3 FY ’25 as opposed to INR28.78 per cubic meter in Q3 FY ’24. The average gas price from Sabarmati, which rose from INR55.41 per cubic meter in Q3 FY ’25 from INR47.56 per cubic meter in Q3 FY ’24. This positive trend is further supported by increased drawal of gas from reaching 81% in Q3 FY ’25. The weighted-average cost of gas in Q3 FY ’25 was INR33.53 per cubic meter, which is notably below the industry average. Gas cost constitutes 1.56% of our total revenue.
For the quarter under review, revenue contributions were as follows: sanitaryware at 50% and faucetwear at 37%, times at 11% and wellness at 2%. On a Y-o-Y basis, faucetwear revenue increased by 6%, tiles by 5%, wellness increased by 24%, while revenue marginally decreased by 0.3%. The sanitaryware and phosphar segments remain the cornerstone of our business and have contributed 87% of the total revenue.
In Q3 FY ’25, 44% of our sales were in premium category, 34% in mid category and 22% at entry-level category. Profit-after-tax was INR46 crores in Q3 FY ’25 as compared to INR51 crores in Q3 FY ’24, registering a decrease of 9.9%. EPS for the quarter stood at INR35.56 versus INR39.12 in Q3 FY ’24.
In terms of the working capital management, inventory days increased from 79 days to 85 days, receivable days from 27 to 33 days and payable days decreased from 46 days to 42 days. Consequently, the net working capital increased from 60 days to 76 days in Q3 FY ’25.
Regarding the sales distribution, Tier-1 cities accounted for 35% of our total sales, Tier-2 cities 21% and Tier-3 cities lag with 44% of total sales. For the nine months ended December 31st December ’25, the company reported net revenue of INR1,337 crores, registering an increase of 1% on Y-o-Y basis. EBITDA excluding other income was at INR185 crores, a decrease from INR202 crores in nine months FY ’24. Profit-after-tax stood at INR161 crores with a slight decrease from INR164 crores in nine months FY ’24. Overall, the company maintained stable revenues and profit on Y-o-Y basis.
As on December 31st and quarter 2024, our cash-and-cash equivalents stood at INR662 crores, marking a decrease of INR106 crores or 13.8% compared to the previous corresponding quarter. This reduction was mainly on account of buyback offering during the second-quarter. In conclusion, I would like to reiterate the company’s confidence in its ability to improve overall performance going-forward.
As the demand cycle strengthens, we are well-positioned to capitalize on improving market trends. Remains committed to maintaining strong financial discipline, optimizing resource utilization and further enhancing its financial performance in the coming quarters.
With this, I would now request the moderator to open the line for Q&A. Thank you very much.
Questions and Answers:
Operator
Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Arshna from IDBI Capital. Please go-ahead.
Archana Gude
Hi, sir. Thank you for the opportunity. So I had two questions. Firstly, on the margin front. So this is a consecutive second-quarter wherein this B2B segment has done better for us compared to retail. And given overall commentary by the even other companies doesn’t look like the recovery will be very sooner than expected. So in that context, achieving margin of 16% to 17% in near-term may be challenging. Your comments on this would be helpful, sir.
Vikas Kothari
So, regarding the margins, like we have already addressed many times in the past also, so despite these challenging market conditions, the company maintained the consistency as far as the performance in preserving the margins are concerned, if you see EBITDA without other income for the quarter, it stood at same line with what was there on Y-o-Y basis, reflecting our stability in earnings. And when we talk about the marginal decline which is there of on overall basis to maintain 16%. So largely it is the demand factor. So we think that once this demand will improve, definitely the margins will come back to the estimated 16% to 17%.
Archana Gude
Sure. But sir, any tentative guidelines you’d like to give us maybe somewhere H2 FY ’26, we will be back to that kind of margins?
Vikas Kothari
Yeah. So we are just as far as our efforts are concerned, even if we are not seeing any substantial growth as far as revenue drive is concerned, but in terms of the margins, we are quite confident that we are going to achieve this 16% to 17% in the next one or two quarters.
Deepak Chaudhary
Deepak, over here, I’d like to just mention one other thing apart from what Mr Vikas said, a large portion of this drop-in margin is coming on account of a little bit of extra discounts which is going on because of the sluggishness which is prevailing in the market. And as soon as the market starts improving, I will find that we have kind of already tone down on the discounts. We have taken it like at a bottom level right now. We’re not increasing discounts any further. But with the improvement in the margin and with the improvement — sorry, with the improvement in the sales, you’ll find that as soon as we start rolling back the discounts, those margins which have dropped by, let’s say, we are at 13.5% right now will again go back to that levels which were earlier 16% to 17%.
Archana Gude
Sure. That was helpful, sir. Sir, secondly, the price hike what we took in Q2. So were the challenges on getting it absorbed given the demand is very sluggish and you know, maybe was it that it was the wrong timing by our end?
Vikas Kothari
So regarding the price rise what we have taken in the last quarter, mainly in case of faucet Ware. So the faucetware, if you see the segment, it has consistently growing as reflected in our past performances in few quarters also. In this quarter, quarter three — financial year ’25, we recorded a Y-o-Y growth of 6%. But while this growth appears lower compared to the quarter two financial year where we have achieved roughly 20% growth in faucet wear.
It is important here to note that the last quarter’s performance was partially influenced by a price increase in faucets. So ahead of this price adjustment, dealers stocked up beyond their immediate requirement, which is roughly contributing an increase of 8% to 10% of additional sales in-quarter two. As a result, some of some of those excess stock were liquidated in-quarter three impacting growth figures. Despite all these, we still achieved a healthy growth of 6% on Y-o-Y basis, which reinforces the strength and demand for our faucetware segment.
Archana Gude
Okay. And sir, maybe lastly…
Deepak Chaudhary
I just explained in the — like in the previous con-call also, when we have taken the price increase, the primary reason for taking the prime increase was a sharp movement in the brass price — brass prices, which is a constitute for you can say a predominant constituent of the total cost of the faucet wear. It was increase of something like 20% in the first three, four months, then it stabilized, but still it will be in the region of 8% to 10% over the March numbers. So that price increase was kind of absolutely essential not only for us, but for all the players in the industry, they want to maintain any kind of decent margins on the product.
Archana Gude
Okay. And sir, maybe lastly, and I’ll ask one more question. So we had this flattish net sales in nine months of FY ’25 on Y-o-Y and given the situation. So are we still sticking with this higher single-digit kind of sales growth for FY ’25 full-year?
Deepak Chaudhary
No, we’ll not be ending with a high single-digit growth for FY ’25. We’ll be more in the lines of lower single-digit growth.
Archana Gude
And so how has been this Jan and half of Feb has done for us?
Deepak Chaudhary
Jan and Feb till-date has been better than what was there in the last on a year-on-year basis but still we don’t anticipate we’ll be ending up with high single-digit growth as we projected earlier. It will be more in the lines of lower-single digits.
Archana Gude
Okay. Thank you so much, sir, and all the best. Thank you.
Deepak Chaudhary
Thank you.
Operator
Thank you. The next question is from the line of Mittun from Kiva Advisors. Please go-ahead.
Mithun Aswath
Hi, sir. I just wanted to understand the sense we are getting when we listen to companies on the paint side are saying demand has bottomed-out and they’re seeing some green shoots in Jan and Feb and actually may have started in December. Are you seeing similar trends where maybe the demand has bottomed-out and there is some pickup in-demand even at the consumer side or is it too early to say that the demand is starting to improve?
Vikas Kothari
Also taking your question, which is futuristic one, so as far as demand is concerned and especially when we talk about the building material industry, as such, we do not shoot — we do not showcase this thing that whether the bottom has come or not, because still the challenges largely in the retail segment is going on. So projects, no doubt there are increase in the project bank. But as far as detail market which is largely impacting the slowness or sluggishness in-demand is still continuing. And our understanding is that with the recent budgets, what have been what has been delivered by our finance minister and after that the relaxation in interest rates, which has come through RBI. So this will bring some sort of strong momentum in terms of the spendings which were hold for a period of time, but it’s still — it will be tough in the coming next one or two quarters.
Mithun Aswath
Right. And I just wanted to understand, I think it’s been now maybe a couple of years where there has been stagnation of growth. In your own history, do you see a trend maybe post-COVID, there was this big bump-up which happened across the building material side and then you’ve had maybe two, three years of sluggishness. Do you see that cycle typically in your history? And then are you seeing maybe rural demand being better than urban right now though?
Deepak Chaudhary
See, like you’re correct that there had been a boom just after COVID and the sluggishness started roughly Q3 of financial year ’23, ’24 and this has been something like four, five quarters now that the sluggishness has continued. So as Mr Vikar said, there has been some green shoots which have come up on the project side and we are expecting that with the kind of project and the interest-rate reductions which have happened, it should start improving on the retail side also, but it will be very difficult to have any kind of predictions till it actually starts reflecting on-the-ground level. So we’ll have to wait maybe for Q4 and maybe after the Q4 con-call, we’ll be able to give you a better idea in respect of how we are anticipating the immediate near-future, like how we anticipate it to go out for the retail segment.
Mithun Aswath
Just one last question was on your expansion. You had identified some land and you are looking to put up a facility, obviously, considering the demand conditions, you may postpone that. But considering our healthy balance sheet, do you think it makes sense for us to be ahead of the market and expand or what are your thoughts there? And have you been able to gain market-share against the competition since there has been a sluggish market? Just wanted your thoughts there.
Vikas Kothari
So regarding the greenfield part, so I think we have already addressed in our Q2 also. So as far as the land acquisition is concerned, the land acquisition with respect to greenfield is completed and the projected completion, once it will start, it will take roughly 18 months from the zero date. But as we have informed that it is not expected from our side that the expansion will start in the current financial year looking to the market unstability, the start date we will revisit once the end-of-the financial year.
Now coming to the question that in future, if there is any going to be any sort of demand and this can be the better opportunity to get the plant constructed at this stage. So we have the mitigating plans already built-up. So which can be catered through three-arms. One is the inventory base what we have built-up can suffice the requirement in terms of shoot up of demand. Second is the capacity utilization. So currently, we are smartly managing our production and inventory and this is that we are not utilizing our planned capacities fully so that can reach-out to the fullest level. And thirdly, we have the very flexible outsourcing model, which can support in terms of whenever there is the shoot-up is there in-demand.
So all these factors will make us more comfortable in terms of meeting the demand. But bringing the plant at this point of time, we will address this thing once we end this financial year and then we will take a suitable decision in terms of the operating plans, what we are going to prepare for the next financial year and how we see and drive the growth in the next coming two years.
And on your second question with respect to the market-share. So as such, if you have seen, all the peer companies are delivering the similar — more or less the — they are all facing the demand pressures and the numbers are not good. So market itself has shrunk. So I don’t think there is a cushion of any sort of a decline in-market share or something which has gone out of from one sector to another sector. So this is a short-term whatever the influence which is going on across the industry is the pain has been taken by all of us and we are quite hopeful that with this real-estate business where the project banks have increased, in our case, it has increased by 15% if we compare with March and their convergence will soon start from the next financial year.
So things will be getting back to normal, but a retail market, which we see that is still it is sluggish, it’s still a few initiatives which are taken by the government and the RBI. So we are hopeful that they will be converting into the demand scenarios being picked-up.
Mithun Aswath
Got it. But typically you’ve historically not done too much of…
Operator
Mr Mittun, may you request you to please join the queue.
Thank you. Ladies and gentlemen, we request you to kindly restrict your questions to two per participant as we have many participants in the queue. The next question is from the line of Pravin Sahai from PL Capital. Please go-ahead.
Praveen Sahay
Yeah. Thank you for opportunity. So the first question is related to your commentary that sir, you had mentioned extra discount given, which has led to some contraction, while in the margin, while I can see that your gross margin on the sequential basis has up, whereas your operating margin has a down. So is that increase in operational expenses has led to the contraction in operating margin or the discount?
Deepak Chaudhary
So it’s a mix of both, like the discounts have gone up and obviously because of the passage of time, inflation also plays a role. And so the other costs which are post the gross margin, they have also gone up. So both have played a part. But as of now, the — if we compare on a year-on-year basis, our margins would have improved had the discounts that we are passing on right now not been at the same — that’s been at the levels which at which they are right now. So it’s a mix of both, you’re right.
Praveen Sahay
Basically that’s discount is continuing from the last nine months and that’s the interpretation we can assume because sequentially it’s not a contracted gross margin.
Deepak Chaudhary
Correct. Like the discount — increased discounts have started from Q3 FY ’24. So they have continued from that point of time and we have kind of bottomed-out right now. The discounts are not increasing.
Praveen Sahay
Okay. Okay. And also if you can give the Nine-Month price hike in the faucet and the sanitaryware. And also on the guidance, are you sticking to INR29 billion by March ’25? That’s it.
Vikas Kothari
Deepak, you may. Okay. So regarding the price hike, the price hike what we have taken is 6% — average 6% in case of faucet wear and 1% in case of sanitary wear. When it comes to the appearance, it may be seen that 6% Y-o-Y growth, which is in 3% was probably due to this 6% increase announced in price size, but this is not the entirely the case because a direct 6% price hike does not immediately translate into 6% increase in average realization. This is because largely project orders have pre-aged pricing and the new rates will only apply for fresh orders only. So if we see in terms of the real conversion of price rise in-quarter three, so effective price rise realized in-quarter three was approximately 2% and remaining was the growth of — driven by volume, that is 4% to contribute to total 6%, indicating that the demand remains stable despite the market conditions.
Praveen Sahay
And the guidance, sir, guidance you are holding just INR29 billion what is the guidance.
Vikas Kothari
So definitely this question needs to be answered. So we are optimistic and committed in terms of meeting our projected target what we have set 2,900 by March ’27. This is supported by our strong project pipeline. And with the improving — with the improvement if it comes in the retail growth, we are confident that we are going to achieve these growth targets. However, there is a caveat that this is contingent upon the market recovering as expected. More we will come out when we will be having a better visibility and we will — at the end-of-the financial year, we will be having better visibility and we’ll provide a more detailed assessment at that point of time. Thank you.
Praveen Sahay
Thank you, sir. All the best.
Operator
Thank you. The next question is from the line of Ritesh Shah from Investec. Please go-ahead.
Ritesh Shah
Yeah, hi, sir. Thanks for the opportunity. Sir, my first question is, what is the captive and outsourcing mix for and faucet? For Q3 nine months?
Vikas Kothari
Yeah, we can answer.
Deepak Chaudhary
For Q3, we — you are asking for faucet fare, I’ll give you figures for both. Like for sanitaryware, the mix was 58% outsourced and 42% was manufacturing. And for faucetware outsourced was 48%, manufacturing was 52%.
Ritesh Shah
And sir for nine months?
Deepak Chaudhary
For nine months it was for outsourced was 57% manufacturing 43% and for outsource 48 manufacturing 52%.
Ritesh Shah
Right. Sir, thanks for the data points. Sir, just a related question, given you indicated the land expansion is already done and zero date commissioning will be 18 months. Are we okay to increase the outsourcing by to say, 50%, 55%, 60% if we have to meet to our stated revenue numbers of INR2,900 crores by March 27. So till what level can we increase our outsourcing? What is the comfort level that the management has over there?
Deepak Chaudhary
So how this function is that typically we would — as of now, the plant — we would be aware that the plant capacity utilization has also gone down, like we have gone up to something like 120% of capacity utilization earlier. Now we are functioning at something like 80%, 85% in the last few quarters and current quarter was something like I think 90%. So what has also happened once we are — once we have come down from 120% to 85% kind of a capacity utilization, plus the mix has also undergone a change.
Typically, what we used to do was that most of the value-added and more complex pieces were manufactured in-house, whereas the simpler pieces are outsourced. So once the capacity utilization started getting impacted, to keep the plant running, we have changed the mix also. So we have bought in some of the materials which you were outsourcing, we have bought them in-house. So once the demand starts improving, we’ll have the first scope for again changing the mix, taking those products which we have taken in-house will be again outsourced.
And once that mix, we are again back to the normal mix that we would want to manufacture within the plant, then we can start increasing capacity and take it again to the levels which were there earlier. So if you really think about it, within the plant with the right optimal mix, we have scope for increasing capacity by, you can say roughly 50% to 60%. And then we would have the outsourcing also where we have lot of scope for increasing the kind of volumes. So we don’t see any challenge in terms of next couple of years can be easily met with the kind of plant capacity which we are having right now in wear as well as in-process.
Ritesh Shah
Sure. And sir, my second question was on working capital deterioration. If could please explain each of the line items on why the number of days either have increased or decreased.
Deepak Chaudhary
I’ll just give you the kind, had mentioned this during his remarks also, but I’ll just give you the figures again. Like the total working capital days have gone up by 16 days, 60 days to 76 days. Now inventory days has gone up from 79 days in Q3 FY ’24 to 85 days in the current quarter. Now this, as we have been explaining earlier also, we need to kind of keep a kind of balance between the plant utilization and the inventory levels. So with the demand not really picking-up, we have to do the plant — keep the plant running at a particular level. So inventory has gone up slightly, but we don’t see a challenge over there because once the demand picks up, this can be liquidated on a — we can say over a period of time.
The receivable date has gone up from 27 to 33. Now this has happened primarily because of the fact that we had changed our cash discount policy slightly during the this quarter due to which the proportion of CD sales has gone down from 76% to 70%. Now the working capital days, the receivable days has increased, but it is also giving us benefits in way of the amount of cash discount that we are passing on. So we are reviewing this on a constant basis. And if we feel that the benefits are out not being outweighed by the cost, then maybe we will revert back to the old policy and this can again be brought back to the levels which were there earlier.
Now the payable days have gone from 46 days to 42 days. This has primarily happened because of a change in the vendor profile. In the last few quarters, the larger mix of our vendors have come in from the MSME sector because of the fact that in the MSME sector, you have to pay within 45 days. So that is why you find that payable days have slightly gone down from 46 days to 42 days. So we feel that inventory days are quite manageable as of now. We don’t need to worry about it. The receivable days are again on account of this factor which I mentioned to you. And payable days is again within that 45 days kind of a margin which is set by the government for the MSME sector. So we don’t see too much of a challenge in case of working capital.
Operator
Sorry to interrupt. May we request Mr Ritesh Shah to please rejoin the queue. We have participants waiting for their turn. Thank you.
The next question is from the line of Resha Mehta from GreenEdge Wealth. Please go-ahead.
Resha Mehta
Yeah, thank you. So on the demand front, you’ve highlighted that the project side has been doing better than the retail, right? So if for nine months FY ’25, you could just quantify what has been the growth in both sanitary and faucetwear separately for projects and retail.
Vikas Kothari
So I think as far as projects in retail are concerned, so largely the composition is 65% to 66% is in retail and 34% to 35% is in project. And especially the breakup between sanitary and faucet, if you see in case of sanitary faucet, it is more or less the same what I have mutated on the total basis.
Resha Mehta
Okay, okay. And this share has remained similar year-on-year basis or would that have not…
Vikas Kothari
On nine-month basis if you see the project portion has increased. So on a nine months basis, if you see sanitary and process, retail is 62% and project is 37% and 1% is exports. And what we see in terms of the quarter three FY ’25, it is somewhat 65% to 35%. So overall, a Y-o-Y basis on nine months criteria, the proportion of projects has increased by 2%.
Deepak Chaudhary
And on an historical basis, if you talk about in a larger context, you’ll find that typically our project to say retail ratio used to be normally 30 70. So now from the 370, it has gone up to something like 35 65
Vikas Kothari
35% to 37, correct.
Resha Mehta
Right. But for a nine months it’s 32, right?
Vikas Kothari
37.
Resha Mehta
37, sorry, yeah. Okay. Okay. The other one was on your two brands, Luxe and Senator. So what would be the revenue salience of these two brands currently in our portfolio and the margins. And also when we look at ad spends, since now we have three brands, right, and the luxury brands, the premium brands are also focused, how do we decide to spend between these three brands.
Deepak Chaudhary
So both these brands, the lux and the brand, these have been just in the process of being launched. So as of now, the revenues are not too great. So it is more about — we talk about the future. We have projected that once maybe down two-year, two years to three years down the line, both these banks that should be constituting something like 10% of our total revenue. So over like by March, we are projecting INR2,900 revenue for the company. So the brand should ideally give you roughly INR290 crores to INR300 crores by March 27.
Now Senator is in the process of being launched. We — the target is that by the end of March, let’s say, month of April, we’ll have roughly 2025 stores, which will be launched for the brand exclusively. Now these would be completely separate from our current display stores which are there. They’ll be at premium location kind of display that it will have the kind of selling experience that will offer to the consumers will be completely different from what is being offered for the current franchise.
For luxe, we are targeting something like 100 stores in the next one year-by financial year ’25, ’26, we should be having 100 stores, which would be a mark for lux. Now they would be mostly existing displays, which will be upgraded and kind of stock with the luxe product profile. So the roadmap for these two are that we should be having roughly 75 stores per center by FY ’26 per center and 100 stores for lux.
Now the margin profile for Sanator and lux would be significantly higher than what is there for the current Cerat portfolio. But the exact things would be more it will take us more time to give you more concrete numbers because the pricing positioning, et-cetera, everything is being planned out. So maybe by Q4, I’ll be able to give you more numbers in respect of how different the margins would look like.
Operator
Thank you. The next question is from the line of Udit from YES Securities. Please go-ahead.
Udit Gajiwala
Yes, sir. Thank you for taking my question. Just wanted your comments in understanding that we have seen a new catalogs coming in from the large conglomerates into this segment into the bathrow space. So how do you see the competition panning out? And does that dent your margins going ahead given it could be a volume push scenario for coming couple of years?
Deepak Chaudhary
We have had these conglomerates coming in for quite some time in the past also. And we have found that all — it has been very difficult for them to translate their success in their respective fields onto the and faucet wear. We have had the paint companies which have come in before. They have had pipes companies which have come in before. We have had tight companies which have ventured into this space. They have not been able to do too great. We find that they go up to a certain number, let’s say, INR40 crores INR50 crores kind of a number is what they typically achieve. But then they start finding that the kind of the margins and the kind of growth which they were anticipating is not really forthcoming in this sector.
Now this is a real tough sector to crack and we don’t see too much of problems from the new incumbents apart from being more of an editant, so we are more concerned with the existing players and the demand scenario which is currently paying out right now rather than the new entrants which have already come in or which are planning to come in.
Udit Gajiwala
Okay, sir, sir, in the same lines that price hikes that you have taken for first-nine months, what would be the average price hikes which your existing peers have taken?
Deepak Chaudhary
In faucet, where you’ll find that most of the players have taken a similar kind of price hike apart from maybe one player who did not take a price hike. In the also we took only 1% price rise, but our competitors have taken in the range of 4% to 5% price rise but what really happens is, even when you are taking a price rise with the kind of scenario which is prevailing right now, most of it by the competitors being passed on the way of discounts.
Udit Gajiwala
Understood, sir. Thank you, sir. That’s it from sir.
Operator
Thank you. The next question is from the line of Sameg Jain from Marcellus Investment Managers. Please go-ahead.
Samyak Jain
Hi. Thanks, sir for taking my question. Just one question. So you mentioned that the stock levels have increased and that is done to maintain the plant utilization at an minimum level. So let’s — yeah. And let’s — if we consider that the demand scenario is weak currently and if we see that it continues for, let’s say, six months, nine months down the line, so are we still planning to continue with the strategy of higher stock levels or we might change it in and going-forward as per the demand requirements.
Deepak Chaudhary
Please up this question into two-parts. One would be for faucets and other would be for sanitaryware. In case of faucets, you’ll find that changing the plant capacity utilization is something which is extremely easy in the sense that most of the process is machine-driven and most of the labor is also on a piece rate kind of a basis and on a contractual basis also. So cutting now production over there is not too much of a hassle or a challenge. The proportion of fixed costs within the faucetware facility is also quite low as opposed to the sanitaryware facility. So you’ll find that in profit wear, we don’t anticipate too much of inventory building up going-forward.
But in case of sanitary wear, it’s a slightly more difficult kind of a situation. It requires a stricter kind of a balancing. The reasons are because in case of sanitary wear, it is not easy to scale-down on the kind of beyond that particular minimum level. One would be because of the fact that skilled labor in this particular category is very difficult to come by, especially like in the casting process, you’ll find that the labors are highly-skilled and difficult to come by. So even if we decide that we want to scale-down on the production levels, it will not be really possible to let go of the skilled labor. So over there, there is a higher kind of a challenge in respect of you know kind of reducing the production levels beyond a certain point.
But we are monitoring it on a continuous basis. That is the reason that we had, as I mentioned earlier, changed the mix and taken some of the outsourcing products to the in-house manufacturing because we want to maintain it at a particular level. But you are right that if it continues for a very long period of time, then maybe we’ll have to take again a review of — as to how we can manage the inventory levels and always again the plant utilization also. But this is, as I mentioned earlier, more challenging for the and not so much for the facet wear.
Samyak Jain
Got it, sir. Perfect. That’s clear. Thank you very much.
Operator
Thank you. The next question is from the line of Akshay Chheda from Canada Mutual Fund. Please go-ahead.
Akshay Chheda
Yeah. Sir, thank you for the opportunity, sir. Just one…
Operator
I’m sorry to interrupt. MR. Cheda, can you speak a bit louder? We are unable to hear you.
Akshay Chheda
Hello. Is it audible now?
Operator
Yes. Go-ahead.
Akshay Chheda
Yeah, sir, just sorry, but coming back to the demand, so I mean, we have changed our mix from 70 30% to 65% 35%, B2B share is going up. Sir, I understand that even from that 65%, that is the retail piece, we would be serving the B2B clients via the retailers. So effectively, if I understand, the demand driver for us would be, say, 70% from new construction and 30% or should be from the replacement side. So sir, why this retail side softness is impacting so much to us?
Logically, there should be some uptick because you also said that B2B is doing pretty well for us. So even from the retail piece, B2B might be getting soft. So still why so much softness is there? And a related question is, is it that the competitive intensity has increased so much from the incumbents and say the Morbi players or the MNCs that is impacting us, if you can talk?
Deepak Chaudhary
So I’ll address the second part first. Like again, as I mentioned earlier, it is not so much about the competition intensity. Of course, they are coming at the fringes and taking away small, small numbers, which would have otherwise maybe come to us or the unorganized sector. But it is not so much the competition from the new incumbents, but more about the demand situation which is playing out right now.
To address your question that bulk of the demand comes in from the new construction. So we have kind of found that the new construction portion, even for the like apart from the metros, for the second and third-tier towns, the construction activity has also slowed down, which is kind of affecting us the demand over there also. So post this budget, we are hopeful that the spending should be increasing over there and we should see an uptick, but we’ll have to wait for a couple of quarters to see whether it actually translates.
Akshay Chheda
Okay, sir. Okay. Thank you.
Operator
Thank you. The next question is from the line of Ankar from Shree Investments. Please go-ahead.
Onkar Ghugardare
Yeah, in this tough environment, how are you making sure that you increase your retail footprint so that you can at least tap that kind of market, which is already untapped as of now from your side?
Deepak Chaudhary
First is once the outside is tough, the most we can do is try to see what we can do within the company. So within the company, we have been doing quite a few things in order to optimize costs. Like I mentioned earlier that the discounts that you are offering have bottomed-out. We are taking a lot of measures for cutting down costs. We have started looking at logistics, which constitute something like 9% to 10% of our total cost, how we can bring down the logistics costs. The — we have started looking at how we can kind of bring down our labor cost. We have already initiated steps towards that direction. Like earlier, most of our labor cost used to be in the nature of fixed-cost.
Now we are consciously trying to get it more towards variable nature so that whenever we want and if you want to cut-down on production, we can actually bring down our labor cost also along with it. We have been looking at kind of reducing our insurance costs, which comes to something like INR16 crore INR17 crores for our total on an overall basis. We have brought it down significantly and looking to bring it down even further. Our benefit in respect of gas will continue because gas is something we take a lot of it from Gail, which is not really impacted by the ups and downs which happen on the — on the market rates kind of a thing. So main idea is that while the outside continues to remain tough, we’ll kind of keep on looking inside and see where we can do better.
We have also been trying to look at the areas that we are weak, like markets where we are not doing too well like East continues to be a area where we have not been doing too well. In the South, typically we do well, the Tamil Nadi is a kind of weak market for us. So we are looking at during these times that we continue to look at the areas that we are weak and try to improve upon those areas. So the idea would be that still time that the market outside starts improving, we keep on doing cost optimization and improving on the areas that we have.
We — we started looking at the premium segment the way of and left in a very serious manner and we have given the roadmap that we should be constituting 10% of our total revenues by 2027. So like idea is that continue to do within ourselves till the time that the outside is tough. You know that was just raising a phrase the other day that success is the sum of small efforts repeated day-in and day-out. So small, small efforts we will continue to do till the market improves and then we will be able to capitalize on the improvements that we have already done.
Onkar Ghugardare
Okay, thanks for the detailed answer. Another thing is that how are you adding the retail network or like what’s the strategy behind? I mean, to what level you want to grow or like how it is growing.
Deepak Chaudhary
For the retail network, like on an each year basis, our target is to add something like 300 to 350 display centers. So typically, when we talk about the display center, it means taking a space within the dealer’s showroom so as of now because you have the numbers like retailrooms, how many we have done in the current year in the current quarter also?
Vikas Kothari
Retail shop number here. So currently, as on December, we have around 1,682-1682, which is again categorized based on the size of the stores. So Style Gallery, we are having around 218 stores, then we have Style Hub 191 and then the smaller versions that is Serai Style it is roughly around 1,273.
Operator
Thank you very much ladies and gentlemen that was the last question for today. I now hand the conference over to the management for closing comments.
Deepak Chaudhary
Thank you. Thank you, everyone, for attending this call and for showing interest in Cerativa Limited. Should you need any further clarification or would you like to know more about the company, please feel to reach-out to me or CDR India. Thank you once again for taking the time to join the call. Thanks and bye.
Operator
Thank you. On behalf of Cera Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.