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You are here : IndiaNotes >> Research & Analysis >> Companies >> Somany Ceramics Ltd. >> Research

Fundamental pick: Buy Somany Ceramics with a target price of Rs...

Reliance Securities | 12 Sep, 2017  | Follow Author | Add to my Favourites 
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Financials & Valuation

We expect SCL to report consolidated revenues and earnings CAGR of 13.8% and 24.6% through FY17-19E. The Company is estimated to post consolidated sales of Rs20.2bn and Rs 23.5bn and net profit of Rs1.1bn and Rs1.4bn in FY18E and FY19E, respectively.


We estimate recovery in volume growth in 2HFY18 and is expected to be aided by Somany’s continued focus on improving product-mix, enhancing distribution reach along with  increased traction in sanitary ware and bath fittings segment.


SCL faced a challenging first quarter as consolidated revenues fell 18.8% to Rs3.3bn, while  EBITDA and net profit were lower by 57% and 67% respectively on yoy basis.


This was mainly on account of two factors:


Rollout of GST with effect from July 1st 2017 resulted in sharp de-stocking by the trade  and impacted revenues especially in the Month of June.


Implementation of SAP HANA across the organisation significantly impacted the revenues in the month of April. The management estimated that losses from SAP HANA implementation on 1QFY18 sales were to the tune of Rs550mn.


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About Reliance Securities

Reliance Securities, the broking arm of Reliance Capital, is one of the India’s leading retail broking houses, providing customers with access to equities, derivatives, currency, IPOs, mutual funds, bonds, and corporate FDs amongst others. The large array of financial offerings helps customers fulfilling their investment objectives on one platform. Focus on timely & error-free execution represents its core strength. Their best in class research offerings, high degree of compliance with stock exchange regulations, ethical business standards, & strong risk management capabilities; Reliance Securities positions itself amongst strong & innovative brands in the financial services space.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.

 




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