ICICI Direct's research report on Somany Ceramics
Somany Ceramics (SCL) is the second largest tiles manufacturers in the domestic tiles market having ~63 MSM capacity (as of Q4) and sanitaryware, faucets capacity of 1.15 million (mn) pieces, 0.65 mn pieces respectively. SCL’s new capacity of 11 MSM (potential to generate ~Rs 250-300 crore worth of additional revenue (at full capacity) to be operational from Q1FY23.
Post steep correction (~36% in the last 3 months), we believe gas price uncertainty is largely built in. Thus, we maintain BUY. We value SCL at Rs 780/share at 22x FY24 P/E (vs. Rs 1000 at 26x, earlier) amid gas price uncertainty and as we cut margins estimates.
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