Target: ₹550
CMP: ₹566.10
We met with Somany Ceramics’ management, including Abhishek Somany (MD and CEO), Sailesh Kedawat (CFO), and Kumar Sunit (Head— Strategy and IR). The management reported that in Q1, the industry saw good demand in the first half, which then slowed due to the monsoon’s onset. The company is hopeful of a price hike in the coming months.
For FY26, it forecasts high-single to low-double-digit volume growth. Management expects to enhance EBITDA margins by 100-150bps y-o-y in FY26. The company has no tile segment expansion plans for the coming quarters. We expect the persistent issue of Morbi dumping to continue to hinder volume growth and margins of tile majors.
In our view, the unorganised 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’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. We downgrade Somany to Add from Buy, owing to the rally in the stock price in the past month. We maintain our TP at ₹550 (20x Mar-27E consolidated EPS).
Published on July 2, 2025
