Somany Ceramics – strong growth; gas price rise risk persists

News: Somany reported a strong growth on favourable base of Q2FY21. The topline was up 32% YoY at Rs.558.3 crore. Tiles Revenues were up 32% YoY at Rs.496 crore.  The EBITDA was at Rs.68.2 crore up 38% YoY. The resultant margins were at 12.2%. PAT was at Rs.35 crore, up 71% YoY.

Views: The growth momentum in volume has been robust. However, key will be management commentary on gas prices (which has moved up sharply) for margins trajectory ahead. The valuations at 26x FY23 P/E leaves little room for upsides.