Somany Ceramics Q1 Results Review - Demand To Improve From Here On, Maintain Buy: Yes Securities

Yes Securities Report

Somany Ceramics Ltd. tile volumes remained flattish YoY (two-year compound annual growth rate stood at 4%) while tile revenue declined marginally by 3%YoY on account of 2% reduction in realisations.

Operating margins were under-pressure at 8.5% versus 10.8% in previous quarter and 8.6% in Q1 FY24 due to lower utilisations which came in at 81% as compared to 89%/70% in Q4 FY24/Q1 FY24 respectively.

Hence absolute Ebitda declined by 3%YoY & 38%QoQ. Though July was tough, it was still better than June-24 and with improvement in demand on m/m basis, management remains up-beat on growth and retains FY25E topline growth guidance of double digit.

Consequently, with expected improvement in utilizations, operating margins are likely to improve by 1-1.5% versus FY24.

Management expects a robust growth in H2 FY25E and aims to maintain a double-digit growth for coming two-three years. The new Max-plant is operating at 35-37% utilisation, which will improve gradually from hereon.

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