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. SCL’s new capacity of 11 MSM has potential to generate ~Rs 250-300 crore worth of additional revenue (at full capacity) which will drive FY23 growth.
Gas price uncertainty continues and there remains a risk of further global gas prices spike amid winters (H2) and continued geopolitical tensions. Thus, we downgrade from BUY to HOLD. We value SCL at Rs 730/share at 22x FY24 P/E amid gas price uncertainty and as we cut margins estimates slightly further.
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