Somany Ceramics Q4FY18: Coming out of GST blues; Buy

SKP Research | June 7, 2018, 4:46 p.m.


Better  economic  growth,  leaving  more  disposable  income  for  discretionary  life  style consumption, rapid urbanisation, changing customer preference towards quality branded products  particularly  amongst  the  growing  mass  affluents,  increasing  nuclear  families and Governments’ thrust on “Housing for All”, structural shift towards organised players post E-way bill implementation coupled with strong brand equity recall and distribution network, augers well for the Company. It has de-risked its growth strategy with an asset light business model, adopting a joint venture route.

We have valued the stock on the basis of P/E of 27x of FY20E earning. Stock is currently trading at Rs 564, after a sharp correction from Rs 974 recently. We have recommended buy on the stock with the target price of Rs 799 (~42% upside) in 18 months.

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