Somany Ceramics Stock Jumps 9% After Q4, Brokerages Raise Target Price; Know More

Somany Ceramics saw a remarkable increase in its stock price, climbing over 9 % and reaching Rs 780 per share during today's intraday trading session.

This significant rise is attributed to the company's stellar performance in the fourth quarter of the fiscal year 2024 (FY24) and the entire fiscal year, despite facing challenges such as subdued domestic demand and reduced exports due to global factors.

The company's shares soared 15.47% to Rs 717.50 after reporting a consolidated net profit increase of 38.85% to Rs 33.88 crore in Q4 FY24, compared to Rs 24.40 crore in Q4 FY23.

Revenue from operations grew by 8.34% year-over-year to Rs 731.81 crore during the quarter. Profit before tax saw a substantial rise of 50.92% year-over-year to Rs 51.60 crore.

"Somany Ceramics Ltd.'s (SCL) Q4FY24 result was slightly better than our estimates on key parameters. The company reported another quarter of subdued volume growth as domestic demand continued to be sluggish and lower exports from Morbi raised competitive intensity in the domestic market. The management has guided lower double-digit net sales growth in FY25E, which would be primarily driven by higher volume. Net sales were higher by 8.6% YoY to Rs7,375mn, while EBITDA came in at Rs795mn, up by 30.3% YoY," IDIB Capital said in the report.

Additionally, EBITDA for Q4 FY24 stood at Rs 79 crore, marking a growth of 30.4% compared to Rs 61 crore in the same quarter last year.

"Over the last few quarters, despite a challenging demand scenario, SOMC has been continuously working on improving balance sheet strength and has bought down working capital days to merely 8 days from 31 in FY23. Furthermore, the company reduced debt by INR1.5bn YoY and improved cash flows significantly to INR3.9bn in FY24 from INR1.6bn in FY23," Nuvama Equities report.

The EBITDA margin expanded to 10.9% in Q4 FY24 from 9% in the corresponding quarter of the previous year.

The company's board declared a final dividend of Rs 3 per share for FY24.

"However, given current muted demand, we are trimming FY25E/26E EPS by 4%/6%. The company improved its balance sheet significantly during the fiscal year. We retain "BUY" with a revised TP of INR914 (earlier INR907) following a rollover to FY26E at unchanged 20x PE. While demand is muted, SOMC is confident of outgrowing the industry and expects low double-digit volume growth (versus the industry's 5-6%) with an improved EBITDA margin," Nuvama added.

For the full fiscal year, Somany Ceramics reported a consolidated net profit increase of 33.63% to Rs 96.88 crore.

"Somany Ceramics' (SOMC) 4Q tile volume/revenue grew 7%/5% YoY (broadly inline); EBITDA margin expanded 180 bps YoY at 10.8%, despite a 248 bps YoY dip in gross margin at 51.7%, aided by lower employee, power & fuel, and other expenses. Demand in 1Q FY25 is expected to be soft due to the election; a strong rebound is expected in 2HFY25 as new housing construction reaches near completion. SOMC aims for 2x growth of the tile industry (5-6%) domestically" Systematix Institutional Equities report.

Revenue from operations for the year rose by 4.57% to Rs 2,577.32 crore over FY23. This impressive performance has prompted brokerages to raise their target price for Somany Ceramics' stock, further fueling the rise in share price.

"We broadly maintain our earnings estimates and expect to clock 11%, 12%, 17%, and 37% CAGR in tile volume, revenue, EBITDA, and PAT over FY24-26E. On healthy EBITDA margin guidance, robust CFO, and ~23% RoIC in FY26E, we upgrade SOMC scrip to BUY with a higher target price of Rs 883 (20x FY26E P/E; earlier Rs 672 at 16x). Volume recovery and healthy margin are key triggers to support our upgrade," Systematix reports.

The company's robust performance in Q4 FY24 and the full fiscal year has solidified its reputation in the market, driving significant gains in its stock price and reinforcing confidence among investors and brokerages.

Founded in 1968, Somany Ceramics exports a wide range of products, including ceramic tiles, sanitary ware, bath fittings, and allied products. The company has a market presence in over 55 countries across six continents, offering a diverse range of products such as wall tiles, floor tiles, polished and glazed vitrified tiles, sanitary ware, and bathroom fittings. With production facilities in Kadi, Gujarat, and Kassar, Haryana, along with other joint venture facilities, Somany Ceramics boasts a total production capacity of 60 million square metres annually.

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