Buy Somany Ceramics, target price Rs 660: HDFC Securities

HDFC Securities has a buy call on Somany Ceramics with a lowered target price of Rs 660 (earlier Rs 680). The current market price of Somany Ceramics is Rs 454.85.

Somany Ceramics, incorporated in 1968, is a Small Cap company with a market cap of Rs 1869.34 crore, operating in Building Materials sector.

Somany Ceramics' key Products/Revenue Segments include Ceramic Floor & Wall Tiles, Others, Other Operating Revenue, Scrap, Export Incentives and Sale of services for the year ending 31-Mar-2024.


Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 646.68 crore, down -3.14% from last quarter Total Income of Rs 667.65 crore and up 5.16% from last year same quarter Total Income of Rs 614.95 crore. The company has reported net profit after tax of Rs 9.67 crore in the latest quarter.

The company's top management includes Mr.Shreekant Somany, Mrs.Rumjhum Chatterjee, Mr.Rameshwar Singh Thakur, Mr.Siddharath Bindra, Mr.Ravinder Nath, Mr.Vineet Agarwal, Mr.Salil Singhal, Mr.Ghanshyam Girdharbhai Trivedi, Mr.Abhishek Somany, Mr.Manit Rastogi. Company has Singhi & Co. as its auditors. As on 31-12-2024, the company has a total of 4 crore shares outstanding.

Investment Rationale
Somany Ceramics management anticipates mid to single-digit volume growth in FY25. The company anticipates high single-digit to low double-digit volume growth in FY26. While Q3 saw weak domestic and export demand, domestic demand has recovered in December and January, and project tile demand is expected to rise as building project reaches completion. The company is not pursuing increased dealer incentives to drive volume, unlike its competitors, and has no expansion plans for the next 12-15 months. It has commissioned its large-sized tiles plant in Gujarat (4.5MSM capacity at Jan-24 end), which should bolster volume growth and product mix in upcoming quarters. Considering the Q3 earning miss, HDFC Securities cut its FY25/26/27E EPS estimates by 7/4/3%. The brokerage maintains a BUY on Somany Ceramics, with a lower target price of INR 660/share (earlier Rs 680) (22x Sep-26E consolidated PE).

Promoter/FII Holdings
Promoters held 55.01 per cent stake in the company as of 31-Dec-2024, while FIIs owned 1.56 per cent, DIIs 23.59 per cent.