Buy Somany Ceramics: target of Rs 290: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Somany Ceramics

Somany Ceramics (Somany), like its key peer, reported resilient Q2FY21 reported numbers as organised tiles players exhibited stronger recovery back to pre-Covid volumes. The tiles sales volume was up 2.7% YoY at 12.9 MSM with realisations down 1.9% YoY, owing to sales mix. Overall revenues were up 0.4% YoY. EBITDA at Rs 49.4 crore was up 10.4% YoY, (margins 11.7%, up 110 bps), largely driven by cost rationalisation initiatives (employee and other expenses down ~12% YoY) along with benign power & fuel expenses that was down 12% YoY due to lower gas prices. PAT was at Rs 20.5 crore, up 2.2x YoY, with growth aided by superior operating performance, lower interest costs as well as some one-offs in base quarter.

Outlook

Somany has become prudent with credit control measures aiding working capital management and debt reduction. Consolidated debt was down Rs 84 crore in H1FY21 to Rs 382 crore, driven by working capital optimisation. It will be important to monitor how the sales traction pick up from here coupled with cost rationalisation sustainability. Given the alluring valuations, improved margins trajectory and balance sheet repair initiatives, we upgrade to BUY recommendation (vs. HOLD, earlier) a revised target price of Rs 290/share (14x FY22E EPS).

For all recommendations report, click here

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