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Somany Ceramics- Strong Demand recovery likely from H2

ICICIdirect Research 09 Aug 2024 DISCLAIMER
  • 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 

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