ICICI Direct's research report on Somany Ceramics
Somany Ceramics is the second largest tiles manufacturers in the domestic tiles market having ~63 MSM capacity (own and JV) and sanitaryware & faucets capacity of 1.15 million (mn) pieces and 0.65 mn pieces, respectively. Somany has announced a large capex of Rs 160-170 crore (seeing strong demand and higher utilisation) in FY22, which will increase its overall capacity by 10 MSM and generate ~Rs 250-300 crore worth of additional revenue (at full capacity) and incremental margin of 200 bps
Outlook
We downgrade from BUY to HOLD after the sharp price run up (up 84% in six months) as we believe the growth outlook is largely priced in We value Somany at Rs 750/share.
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