Somany Ceramics Ltd. share price target

Somany has announced a large capex of | 180-190 crore (seeing strong demand and higher utilisation) in FY22, which will increase its overall capacity by 10 MSM and generate ~| 250-300 crore worth of additional revenue (at full capacity) and incremental margin of 100-150 bps...

domestic tiles market having ~63 MSM capacity (own and JV) and sanitaryware & faucets capacity of 1.15 million (mn) pieces and 0.65 mn pieces, respectively. Somany has announced a large capex of | 160-170 crore (seeing strong demand and higher utilisation) in FY22, which will increase its overall capacity by 10 MSM and generate ~| 250-300 crore worth of additional revenue (at full capacity) and incremental margin of 200 bps Q1FY22 Results: Somany reported weak Q1FY22 sequential results. The topline was up 95% YoY, down 41% QoQ at | 329.9 crore. Tiles...

Covid to impact Q1; mid teen growth guidance for FY22 Volume growth was led by strong traction in tier II, III and below cities, aiding capacity utilisation (at ~97% in Q4) and now contributes 75% to revenues. Furthermore, volume diversion towards exports by Morbi players (~40% Morbi volumes exported now vs. ~25% earlier), is also improving the demand and pricing scenario for organised player. Going forward, the company expects 60-70% of overall targeted sales during Q1FY22 owing to the second wave. April 2021 sales were at ~85% of the company's internal...

SOMC reported consolidated Q4FY21 revenue growth of 59% YoY with tile volumes up 52% off a low base due to the national lockdown last year

Morbi exports traction boosts domestic organised players Volume growth was led by strong traction in tier II, III and below cities, aiding capacity utilisation notwithstanding Metro cities demand still at ~80% of pre-Covid levels. Exports by Morbi players driven by the anti-dumping duty levied by the US on Chinese players as well as other countries, has been absorbing the Morbi based unorganised volumes (~34-35% Morbi volumes exported now vs. ~21% earlier), thus improving the demand and pricing scenario for organised players. Riding on demand traction, the company will...

Somany Ceramics' (SOMC) consolidated revenue grew 13% YoY to Rs 4.9bn in Q3FY21 as tile volumes grew 12%.

Somany has become prudent with credit control measures aiding working capital management and debt reduction. Consolidated debt was down | 84 crore in H1FY21 to | 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...

SOMC: Recovery expected in Q2; upgrade to BUY on cheap valuations. ECLX: Aggressive cost management saves the day

Somany Ceramics (SOMC) reported a dull Q1FY21 as consolidated revenue shrank 57% YoY to Rs 1.7bn, with tile volumes down 56% YoY.