Hold Somany Ceramics; target of Rs 605: ICICI Direct

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ICICI Direct's research report on Somany Ceramics

Somany Ceramics (SCL) is the second largest tiles manufacturers in the domestic tiles market having ~73 MSM capacity and sanitaryware, faucets capacity of 1.15 million (mn) pieces and 0.65 mn pieces, respectively. Greenfield slab tile manufacturing facility of ~4.5 MSM/annum in Gujarat is expected to commence production by Q1FY24 end (capex of ~Rs 170 crore).

Outlook

Soft demand presents a new concern amid likely recovery in margins ahead. Thus, we maintain HOLD. We value SCL at Rs 605/share at 20x FY24E P/E as we cut margins, topline estimates slightly further.