Buy Somany Ceramics; target of Rs 500: ICICI Direct

ICICI Direct's research report on Somany Ceramics

Somany Ceramics reported strong Q3FY21 numbers with sales volumes growth recovery faster than anticipated. Tiles sales volumes were up 11.8% YoY at 14.9 MSM with stable realisations (up 0.8% YoY at Rs 288/SCM). Tiles revenues were up 12.6% YoY at Rs 428.6 crore while bathware revenues were up 8.4% YoY at Rs 50.9 crore. Overall revenues were up 12.9% YoY at Rs 492 crore. EBITDA at Rs 63.3 crore was up 10.4% YoY, driven by better product mix driving gross margins. Margins at 12.9% were up 363 bps YoY. PAT was at Rs 28.2 crore, up 1.7x YoY, with growth aided by superior operating performance and lower interest costs.

Outlook

We maintain BUY with a revised target price of Rs 500/share at 17x FY23E P/E (Rs 290/share, earlier).