NEW DELHI: India’s ceramic tile industry is set to cast a 4-5% increase in revenue this fiscal and 5-6% in the next—marking a rebound from an export-led decline of 2% last fiscal—on strong domestic demand even as exports decline due to the impact of tariffs imposed by the United States (US), according to Crisil Ratings.
Domestic demand, accounting for about two-thirds of revenue, will continue to grow fuelled by tailwinds from residential real estate, where project launches and completion rates remain supportive, according to the rating agency.
Increased preference for premium tiles, such as glazed vitrified tiles and polished glazed vitrified tiles, will boost realisations. The share of premium tiles in domestic revenue has risen 700-800 basis points over the five years through fiscal 2026 to ~60%.
Nitin Kansal, director of the company said, “Demand for ceramic tiles typically kicks in 3-4 years after the launch of real estate projects, which is around the time of their completion. In fiscals 2021 and 2022, supply of projects increased over 15%, which will support demand for ceramic tiles this and next fiscal. As a result, domestic revenue is poised to grow 6-7% this fiscal, driven by volume growth.”
Export revenue, on the other hand, will see another year of decline, albeit at a slower pace of 2% compared with the 15% drop last fiscal. While exports have grown 8% in the first half of this fiscal, the tariffs imposed by the US (which, along with Mexico accounts for 15% of overall ceramic tile exports from India) will keep the export growth number negative for the full fiscal.
Weaker exports and rising kaolin costs (forming 25-30% of the total cost) due to lower mining output and higher logistic costs will compress operating margins by 30-40 bps to 10.3-10.4% this fiscal.
Nilesh Agarwal, associate director of the company said, “With growth in revenue returning, cash flows of companies will improve. With asset utilisation seen at 64-66%, companies are likely to utilise these cash flows to fund working capital, maintaining low financial leverage below one time and healthy interest coverage of over four times in the medium term.”
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