Buy Somany Ceramics, target price Rs 870: ICICI Securities

ICICI Securities has buy call on Somany Ceramics with a target price of Rs 870. The current market price of Somany Ceramics Ltd. is Rs 556.25. Time period given by analyst is one year when Somany Ceramics Ltd. price can reach defined target.

Somany Ceramics Ltd., incorporated in the year 1968, is a Small Cap company (having a market cap of Rs 2347.18 Crore) operating in Building Materials sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 568.20 Crore, up 14.61 % from last quarter Total Income of Rs 495.78 Crore and up 58.25 % from last year same quarter Total Income of Rs 359.05 Crore. Company reported net profit after tax of Rs 35.26 Crore in latest quarter.

Investment Rationale
Besides correcting the balance sheet, the company also seems geared to post industry leading volume growth aided by low base (of last 5 years), recent capex initiatives and structural improvement in EBITDA margins driven by superior product mix and operating leverage. The brokerage now rates SOMC as top pick in building materials space.

Promoter/FII Holdings
Promoters held 54.8 per cent stake in the company as of March 31, 2021, while FIIs held 4.6 per cent, DIIs 18.1 per cent and public and others 22.5 per cent.