Buy Somany Ceramics; target of Rs 679: ICICI Securities

ICICI Securities's research report on Somany Ceramics

In Q3FY25, Somany Ceramics (SOMC) reported consol. revenue growth of 5.3% YoY with tile volume growing 4.5% YoY (5-year CAGR of 5.1%) while tile realisation declined 0.9% YoY (flat QoQ). Consol. EBITDA margin (OPM) decreased 135bps YoY (-11bps QoQ) to 8.3% due to higher RM costs (+54bps YoY, including power and fuel cost) and higher employee expenses (+89bps YoY), resulting in EBITDA/APAT declining 9.4%/50.7% YoY.

Outlook

Management stated that demand was subdued in Q3, but expects it to pick up going forward driven by the real estate sector. It has guided for high single-digit to low double-digit volume growth with OPM having an upward bias in FY26. We cut our EBITDA estimates by ~7%-13% for FY25–27 and maintain BUY with a rolled-over Dec’25E TP of INR 679 (earlier: INR 877).