Somany Ceramics Q3 Results Review - Subdued Demand Weighed On Earnings: IDBI Capital

IDBI Capital Report

Somany Ceramics Ltd.’s Q3 FY24 result was broadly in-line with our estimates on key parameters. Domestic demand continued to be sluggish along with low capacity utilisation leading to reduction in topline and volume for this quarter.

The company’s large format tile plant was successfully commissioned during Q3 FY24 and commenced commercial production in January in order to strengthen their value-added product offering and expand the reach in niche segment.

Net sales was down by 1.7% YoY to Rs 6,121 million, while Ebitda came in at Rs 590 million, up by 45.4% YoY. The company reported net profit of Rs 234 million, a robust growth of 104% over Q3 FY23.

We expect revival in earnings in mid-long term horizon. We roll over to FY26E and maintain 'Hold' with a revised target price of Rs 775 (earlier Rs 749), assigning 18 times price to earning ratio on FY26E.

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