Upbeat on Vintage tiles; see double-digit vol growth in FY19-20: Somany Ceramics

Somany Ceramics is on the radar today after Edelweiss reiterated their buy rating on the stock and increased the target price to Rs 1,214 versus Rs 900 earlier.

To talk about the outlook for the company going forward, CNBC-TV18 spoke to Abhishek Somany, MD, Somany Ceramics.

First half was aberration because of Systems, Applications & Products implementation (SAP) and then pre-GST and post GST impact. Second half also started with tepid growth because GST was brought down from 28 to 18 percent and since the traders were expecting this until November 15, the volumes were impacted. However, volumes have improved now and numbers in Q3 and Q4 would be better, said Somany.

So, don’t know what the overall FY19 volumes would look like but H2FY19 looks decent. H1 saw degrowth in terms of volumes.

Talking about revenues coming in from joint ventures (JVs) and that from out sourcing, he said around 40 percent of revenues come from own manufacturing, and around 60 percent from JVs and outsourced manufacturing.

He said approximately 40 percent of the total revenues comes from basic ceramic tiles.

He also confirmed that some of the small organised players are coming out with their own brands and could pose a challenge for the big players going forward. There would be around 10-12 players at the top end of the prism.

With regards to value added tiles – the company has completed its expansion of Vintage Tiles and added another plant for ceramic tiles.

Somany said the augmented capacity from Vintage Tiles will be another 2 million. In the Haryana plant, they have another value added product coming soon, which is expected to do well, said Somany.