Nuvama has maintained a ‘Buy’ rating on Somany Ceramics, revising the target price to ₹857 from ₹918, implying a potential upside from the current market price (CMP) of ₹652.
The brokerage forecasts volume growth of 5-6% in FY25E, with an acceleration to low double digits in H2FY25E. However, EBITDA margins are expected to remain flat in FY25, with a potential increase of 100-150 basis points in FY26, driven by a greater focus on value-added product mixes.
Key drivers include two new launches aimed at lifting the Max plant’s utilization to 50% and a projected outperformance of the tiles segment over bathware, which currently contributes 10-15% of the business.
Despite these positives, Nuvama has sharply cut its EPS estimates for FY25E/FY26E/FY27E by 25%/15%/10%, citing current weakness in demand and muted margin guidance for FY25.
The company’s long-term focus on value addition and operational efficiency keeps it a buy for investors looking for gradual recovery and growth in the ceramics sector.
Disclaimer: The above is for informational purposes only. Please consult a financial advisor before making any investment decisions.
