Somany Ceramics CEO Expects 'High Single-Digit Growth' H2 On Improved Capacity Utilisation

Somany Ceramics' Managing Director and Chief Executive Officer Abhishek Somany believes that the company's performance in the second half of the current financial year will improve, on the back of enhanced capacity utilisation and better margins amid expectation of demand stabilisation.

He told NDTV Profit that the performance of the tiles and bathware manufacturer will be driven by its own manufacturing plants as well as its joint ventures in the tiles space.

Net profit of Somany Ceramics Ltd. fell 38.4% year-on-year to Rs 17 crore in the second quarter of fiscal 2024–25 against Rs 30 crore in the same quarter last year. Ebitda margins shrank 180 bps YoY to 5.1% from 6.9% in the year-ago period.

The sharp decline in net profit, according to Somany, was triggered by the drop in the company’s capacity utilisation. “We've been able to maintain the same margins as the last quarter considering that the capacity utilisation is lower, which means that we have been able to do some good stuff around cost and also some value addition which we've done... Going forward, it's going to be a better H2 than the H1,” he said.

Acknowledging that Q1 was a washout, he blamed the incessant rains for affecting the company's performance in Q2. However, he added, “We are looking at a much much better quarter three and a much better quarter four. With that, the margins will also go up because the capacity utilisation obviously will become better.”

The top executive added that the company’s own manufacturing plants and the joint ventures it has entered in the tile segment will drive growth in the second half.

“In the first half, the own manufacturing came off a little bit and trading went up but that would reverse. The minute I say capacity utilisation going up, that means it would be for our own manufacturing and our JVs where we have between 50% and 80% (utilisation) in most of them,” he said.

Somany pointed out that the company is largely unaffected by pressures in the export market, because it has minimal exposure there. “As far as India is concerned, it's a clear five months going forward. So, capacity utilisations will be much better. And we're looking at a double-digit growth or a high single-digit growth in the H2.”

Shares of Somany Ceramics closed 0.44% higher at Rs 680.10 apiece, while the benchmark index Nifty 50 ended Friday’s session 0.21% lower at 24,148.20.