Somany Ceramics Cut To 'Add' As HDFC Securities Sees Limited Upside After Recent Rally

Somany's newly commissioned large-sized tiles Max plant in Gujarat, with a 4.5MSM capacity, is expected to drive volume growth and improve product mix..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities.In our view, the unorganized Morbi tile manufacturers have disrupted the industry by flooding the domestic market with low-priced products. Given the ongoing geopolitical tensions, Indian tile exports are expected to remain volatile. While strong real estate sales have provided some impetus to the tile sector, much of this potential growth has been offset by Morbi's aggressive pricing, in our view. Somany Ceramics Ltd.'s new largesized tiles Max plant in Gujarat, with a 4.5 MSM capacity commissioned at the end of January 2024, is expected to boost the company’s volume growth, enhance the product mix, and improve margin. We project a 6% tile volume CAGR from FY25 to FY27E. We forecast a 7%, 11%, and 39% CAGR for revenue, Ebitda, and adjusted profit after tax, respectively, over FY25-27E. We maintain our estimates for FY25-27E. We like Somany due to its robust retail distribution, improving product mix, and focus on working capital management. We downgrade Somany, however, to Add, owing to stock price rally in the past month. We maintain our target price at Rs 550/share (20x Mar-27E consolidated EPS)..Click on the attachment to read the full report:.CreditAccess Grameen Pivoting From Stress To Stability, Says Motilal Oswal Maintaining 'Buy'.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Somany Ceramics Cut To 'Add' As HDFC Securities Sees Limited Upside After Recent Rally

HDFC Securities downgrades Somany to Add, owing to stock price rally in the past month.

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