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Business News/ Markets / Stock Markets/  Somany Ceramics stock climbs over 17% as brokerages lift target price following strong Q4 earnings

Somany Ceramics stock climbs over 17% as brokerages lift target price following strong Q4 earnings

Somany Ceramics saw a 17.4% surge in shares, reaching ₹729 per share, driven by strong performance in Q4 and FY24. Operating profit increased by 30% YoY, attributed to stable input costs and cost optimisation efforts.

The company reported a consolidated net profit of ₹34 crore in Q4FY24 as compared a net profit of ₹24 crore in Q3FY23. Premium
The company reported a consolidated net profit of 34 crore in Q4FY24 as compared a net profit of 24 crore in Q3FY23.

Somany Ceramics, a prominent tile manufacturer in India, witnessed a remarkable surge of 17.4% in its shares during today’s intraday trading session, reaching 729 per share.

This significant increase comes on the back of the company's outstanding performance in the quarter ending March and for the entire fiscal year (FY24), despite facing challenges such as subdued domestic demand and reduced exports due to global factors.

The company on Wednesday reported a 9% YoY jump in its consolidated revenue from operations at 738 crore. However, the operating profit jumped 30% YoY to 79 crore, while the operating profit margin improved by 190 bps YoY and 210 bps on an annual basis, taking it to 11% in Q4. 

Also Read: Earnings Impact: NCC share price jumps 8% on strong Q4 results

This improvement can be attributed primarily to stable input costs and ongoing efforts at cost optimisation. The power and fuel costs for the reporting quarter totaled 139 crore, down from 154 crore in the corresponding period last year. It reported a consolidated net profit of 34 crore in Q4FY24 as compared a net profit of 24 crore in Q3FY23. 

For the full fiscal year (FY24), the company recorded a consolidated revenue from operations of 2,591 crore, marking a 4.51% YoY increase. Furthermore, the net profit rose to 99 crore from 67 crore in FY23, representing a 47.76% YoY growth.

The company expresses optimism regarding the future, foreseeing a positive shift in the domestic demand landscape in the coming years, particularly in the second half of the current fiscal year. 

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This optimism is based on several factors, including the expected rebound in domestic demand driven by new construction projects, the projected growth acceleration in the real estate sector, and the sustained momentum in exports, which are anticipated to bolster the Indian tile industry further.

Following the company’s financial performance, domestic brokerage firm Systematix Institutional Equities upgraded the rating on the stock to ‘buy’ and also revised its target price higher to 883 apiece from an earlier target price of 672 apiece. 

Similarly, Nuvama Institutional Equities has also raised its target price on the stock to 914 apiece from the previous target of 907. 

Also Read: Titagarh Rail Systems stock spikes over 9% on stellar performance in Q4

“Over the last few quarters, despite a challenging demand scenario, SOMC has been continuously working on improving balance sheet strength and has bought down working capital days to merely 8 days from 31 in FY23. Furthermore, the company reduced debt by 1.5 billion YoY and improved cash flows significantly to 3.9 billion in FY24 from 1.6 billion in FY23," the brokerage said.



Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 16 May 2024, 12:55 PM IST
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