Buy Somany Ceramics; target of Rs 916: ICICI Securities

ICICI Securities's research report on Somany Ceramics

In Q4FY24, Somany Ceramics (SOMC) reported consolidated revenue growth of 8.6% YoY driven by tile volume growth of 7.3% YoY (+19.9% QoQ; 3-year CAGR of 3.8%), but tile realisation declined 2.3% YoY (-1.2% QoQ). Consol. OPM increased 180bps YoY (+113bps QoQ) to 10.8%, primarily due to lower RM costs (down 128bps YoY, including power and fuel cost), resulting in EBITDA/PBT growth of 30.3%/41.4% YoY, respectively. Management stated demand conditions were subdued in Q4FY24 and remain so in Q1FY25-TD, and expects it to pick up H2FY25 onwards as many real estate projects will complete by then. For FY25, it has guided for low double-digit tile volume growth with OPM increase of 100-150bps YoY (aided by benign gas prices and operating leverage).

Outlook

We broadly maintain estimates and BUY rating with an unchanged Mar’25E TP of INR 916.