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Somany Ceramics- Strong Demand recovery likely from H2
- While Q1FY25 saw a flattish volume growth, with strong real estate completion cycle kicking in coupled with benign gas costs, we expect Somany to remain a one of the beneficiaries of the same.
- Company expects low double digits volume growth in FY25 vs. 5-6% growth for the industry. Overall topline is expected to grow at 10.2% CAGR over FY24-26 to ₹ 3102 crore.
- Amid benign Gas prices, mix improving to premium larger tiles and operating leverage led benefits, we expect EBITDA margins to reach ~10.8%/11.2% in FY25/FY26, respectively from 9.8% in FY24. We expect ~32% earnings CAGR over FY24-26
We value Somany at ₹ 900, at 22x FY26 P/E and have a Buy rating
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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