may 28, 2018 somany ceramics (somcer) |...

May 28, 2018

Result Update

ICICI Securities Ltd | Retail Equity Research

Guides for double digit volume growth...

Somany Ceramics’ (Somany) sales volumes grew 2.3% YoY to 15.9

MSM (our estimate: 15.2 MSM) given the high base

Somany reported a dismal topline performance as its revenue de-

grew 5.9% YoY to | 526.7 crore (our expectation: | 530.9 crore)

The EBITDA margin contracted 20 bps YoY to 8.9% (our estimate:

7.4%) on account of higher other expenses (25.1% as a percentage

of sales in Q4FY18 vs. 20.3% in Q4FY17)

Net profit de-grew 6.0% YoY to | 23.5 crore (our expectation: | 21.8

crore) due to topline de-growth and margin contraction

The board has recommended dividend worth | 2.7/share for FY18

Volumes remain flattish in FY18…

Sales volumes stayed flattish YoY at 49.5 MSM for FY18 due to a host of

issues. Firstly, in Q1FY18, due to SAP implementation issues, the

business suffered & volumes fell 15.8% YoY to 9.3 MSM. Secondly,

changes in GST rates during the year led to de-stocking at dealer’s level,

again impacting volumes. Thirdly, the anticipated shift from unorganised

to organised players did not pan out as anticipated, due to a delay in

implementation of e-way bill. However, the management expects double

digit volume growth for FY19E & FY20E with e-way bill implementation &

a gradual improvement in demand scenario. The company would focus

on raising capacity utilisation and boost revenues through own facilities

and JVs while outsourcing will go down, thereby improving margins.

Consequently, we expect topline, PAT to grow sharply at 17.1%, 27.9%

CAGR to | 2342.1 crore, | 126.8 crore, respectively, in FY18-20E.

Realisations to stabilise from here on…

The management has indicated that GVT prices have fallen by ~| 100-

150/ sq mt post the Vibrant Ceramic Exhibition in Gujarat due to increased

competition in the segment. Furthermore, it indicated that prices for PVT

and soluble salt tiles have bottomed out and no further correction is

expected in the near term. Prices of double charge tiles have also fallen 2-

3% recently. Overall, these price falls have impacted Somany’s overall

realisation significantly, which fell 12.7% YoY on a blended basis to | 309/

sq mt. However, the management is confident of price stability ahead

with change in value add mix and lower contribution from outsourcing.

Somany to benefit from government initiatives…

For ceramic tiles, GST has been revised downwards from 28% to 18%,

which is beneficial for organised player like Somany. Furthermore, with e-

way bill implementation in place, the anticipated shift from unorganised to

organised segment is expected to pan out, going forward. Being a leading

organised tiles player, Somany would benefit from government initiatives

like Swachh Bharat Abhiyaan and Housing for All as demand for tiles

would go up.

Margin improvement needs to be closely watched; maintain HOLD…

Somany would be a long term beneficiary of GST implementation as it

would reduce the pricing differential between organised & unorganised

tiles. Further, GST would create a level playing field for organised players

However, the anticipated shift towards organised pie has not panned out

as anticipated and margins continue to remain under pressure with rising

fuel prices. Hence, we continue to maintain our HOLD rating on the stock

with a revised target price of | 600 (~20x FY20E EPS).

Somany Ceramics (SOMCER) | 550

Rating matrix

Rating : Hold

Target : | 600

Target Period : 12-18 months

Potential Upside : 9%

What’s Changed?

Target Changed from | 700 to | 600

EPS FY19E Changed from | 20.9 to | 23.0

EPS FY20E Changed from | 27.9 to | 29.9

Rating Unchanged

Quarterly Standalone Performance

(| crore) Q4FY18 Q4FY17 YoY (%) Q3FY18 QoQ (%)

Revenue 526.7 559.6 -5.9 385.7 36.6

EBITDA 46.6 50.8 -8.2 28.8 61.8

EBITDA (%) 8.9 9.1 -23 bps 7.5 138 bps

PAT 23.5 25.0 -6.0 14.3 64.1

Key Financials (Consolidated)

(| Crore) FY17 FY18 FY19E FY20E

Net Sales 1,727.8 1,708.2 2,014.0 2,342.1

EBITDA 230.6 181.4 222.8 269.7

Net Profit 112.1 77.5 97.6 126.8

EPS (|) 26.4 18.3 23.0 29.9

Valuation summary

(x) FY17 FY18E FY19E FY20E

P/E 20.8 30.1 23.9 18.4

Target P/E 22.7 32.8 26.1 20.1

EV / EBITDA 11.4 15.1 12.1 10.0

P/BV 4.4 4.0 3.5 3.0

RoNW (%) 21.4 13.3 14.8 16.6

RoCE (%) 19.2 12.2 13.9 16.1

Stock data

Particular Amount (| crore)

Market Capitalization 2,331

Total Debt 540

Cash 14

EV 2,857

52 week H/L (|) 974 / 506

Equity capital 8.5

Face value | 2

Price performance (%)

Return % 1M 3M 6M 12M

Kajaria (3.1) (4.3) (24.8) (16.5)

Somany (18.1) (20.5) (38.5) (28.0)

Cera (8.3) (11.9) (19.5) 1.2

Research Analyst

Deepak Purswani, CFA

[email protected]

Vaibhav Shah

[email protected]


Variance analysis

Particular Q4FY18 Q4FY18E Q4FY17 YoY (Chg %) Q3FY18 QoQ (Chg %) Comments

Net Sales 526.7 530.9 559.6 -5.9 385.7 36.6 Revenue de-growth was largely on account of fall in average

realisations

Other Income 4.9 4.8 3.7 33.1 4.8 2.3

Raw Material Expense 63.5 69.1 49.7 27.7 50.6 25.6

Purchase of Traded Goods 258.4 258.2 278.6 -7.3 188.2 37.3

Power & Fuel 0.0 0.0 0.0 0.0

Employee benefit expenses 36.8 50.6 36.3 1.3 37.0 -0.6

Other Expenses 107.4 132.1 113.5 -5.4 96.7 11.1

EBITDA 46.6 39.2 50.8 -8.2 28.8 61.8

EBITDA Margin (%) 8.9 7.4 9.1 -23 bps 7.5 138 bps Margin contraction was on account of rise in fuel costs

Depreciation 8.3 6.8 7.1 16.0 6.8 22.3

Interest 4.4 4.7 4.0 11.0 4.7 -5.3

PBT 38.8 32.6 43.4 -10.5 22.2 75.1

Taxes 13.4 10.7 14.3 -6.5 7.8 70.5

PAT 23.5 21.8 25.0 -6.0 14.3 64.1 Bottomline de-growth led by poor topline show and margin contraction

[

Source: Company, ICICI Direct Research

Change in estimates

Particulars FY19E FY20E

Old New % Change Old New % Change Comments

Revenue 1708.2 1835.4 2014.0 9.7 2171.4 2342.1 7.9 We factor in strong volume growth ahead

EBITDA 181.4 174.9 222.8 27.4 217.1 269.7 24.2

EBITDA Margin (%) 10.6 9.5 11.1 156 bps 10.0 11.5 152 bps EBITDA margin revised upwards in line with management

commentary

Adjusted PAT 77.5 88.4 97.6 10.4 118.2 126.8 7.3 Topline upgrade and margin revision leads to bottomline

upgrade

EPS 18.3 20.9 23.0 10.4 27.9 29.9 7.3

FY18E


Assumptions

Comments

FY17 FY18 FY19E FY20E FY19E FY20E

Sales Volume Assumptions (MSM)

Own Manufacturing 21.9 20.3 23.0 24.3 21.0 23.1

JV 21.9 19.6 24.7 31.6 24.0 30.3

Outsourcing/Imports 6.0 9.6 8.4 8.0 6.0 4.9

Total 49.7 49.5 56.1 63.9 51.0 58.3 We have upgraded our volume estimates given the anticipated demand

improvement and low base

Average Realization (|/SM)

Own Manufacturing 337 311 311 311 315 318

JV 402 355 355 355 360 364

Outsourcing/Imports 238 209 209 209 213 215

Blended realization 354 309 315 320 320 331

EarlierCurrent



Conference call highlights

Future outlook: The management expects double digit growth for

FY19E and FY20E. It further expects PBT margins to rise by 0.5-

0.6% in FY19E. The company shall focus on increasing capacity

utilisation and boost revenue through own facilities and JVs while

outsourcing will go down

FY18 performance: The management has indicated that SAP

implementation issues in Q1FY18 and Vibrant Gujarat aftermath in

Q3FY18 continued to impact the company’s sales performance.

Also, increase in crude prices and a weakening rupee have had a

direct impact on the company’s margins as gas prices (for North

plant) rose to | 34-34.5/ SCM in Q4FY18

Sanitaryware, bath fittings business: With trebling of sanitaryware

capacity, revenues grew 32% in FY18 to ~| 100 crore. With

contribution of new capacity for full year in FY19E, the

management expects to clock revenues worth ~| 150 crore.

Further, bath fittings revenues were at | 50 crore in FY18. The

management expects to grow to ~| 75 crore in FY19E

Gas prices: In FY18, gas prices shot up from | 24 to | 34.5/ SCM

for North plant (Kassar), which contributes 20% to the topline. For

April 2018, prices have further inched up to | 36/ SCM. On the

other hand, Morbi based players witnessed price increase by

| 2.5-3/SCM in FY18 due to cross-subsidy provided by the

government. Going forward, the company expects gas prices to

be contained at the current levels. If any increase, it would only be

for the northern plants by | 2-2.5/SCM, which is factored in the

margin guidance

Andhra plant: The Andhra plant will have a capacity of ~4-4.2

MSM to manufacture GVT. It is expected to be commissioned by

Q4FY19E. Also, there are plans to upgrade the Vicon Ceramics

plant capacity from 6000 sq mt to 8000 sq mt per day. This facility

is expected to be commissioned around Diwali

Dealer network: The company added 326 dealers net in FY18

taking the total count to 2,000 by the end of FY18. It has opened

100 new exclusive showrooms and 50 new bathware showrooms

in FY18 taking the total to 324

Affordable Housing: The company is targeting the upper end of

affordable housing segment and launched some limited SKUs in

PVT, soluble salt and double charged tiles for the same

Fall in realisation: The management has indicated that GVT prices

have fallen by about | 100-150/ sq mt post the Vibrant Ceramic

Exhibition in Gujarat due to increased competition in the segment.

However, the management is confident of price stability ahead

Ad expense: Advertisement expense for the company during the

quarter was at ~3-3.5% of sales. The management expects to

maintain it, going forward

Revenue mix: The revenue mix during the year was at: ceramic

tiles: 42%; PVT: 37% and GVT: 21%

Capex: For FY18, capex was at | 100 crore. For FY19E, the

company has guided for capex of ~| 60-65 crore


Company Analysis

Exhibit 1: Capacity break-up (In MSM)

21.6 21.6 21.625.6 26.3 26.3 26.3

15.521.0

25.725.7 25.7

33.2 35.29.5

9.5

9.09.0 9.0

9.09.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

FY14 FY15 FY16 FY17 FY18 FY19E FY20E

(In

M

SM

)

Own Manufacturing JV Outsourcing


Exhibit 2: Capacity break-up (%)

41% 38% 42% 43%38% 37%

40% 46%43% 42% 49% 50%

18% 16% 15% 15% 13% 13%

0%

20%

40%

60%

80%

100%

FY15 FY16 FY17 FY18 FY19E FY20E

(%

)

Own Manufacturing JV Outsourcing


Exhibit 3: Revenue break-up (| crore)

624739

632 715 755

798

877

694

876

1120

368142

202

176

167

0

500

1000

1500

2000

2500

FY16 FY17 FY18 FY19E FY20E

(|

crore)

Own manufacturing JV Outsourcing


Exhibit 4: Revenue break-up (%)

35%42% 41% 40% 37%

45%

50%45% 50% 55%

21%

8%13% 10% 8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


(|

crore)



Exhibit 5: Quarterly standalone sales volume trend

5.85.0 5.3 4.9

6.7

4.2 4.7 4.96.5

6.4

4.85.3 5.3

6.6

3.9

5.1 4.6

6.0

1.6

1.31.4

1.0

2.3

1.2

2.72.3

3.4

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Q4FY16

Q1FY17

Q2FY17

Q3FY17

Q4FY17

Q1FY18

Q2FY18

Q3FY18

Q4FY18

(In

M

SM

)



Exhibit 6: Quarterly standalone sales value trend

177 164 182 173221

139 153 145196

265

197213 213

255

155177

158

205

91

4137

19

44

28

5943

72

0

100

200

300

400

500

600

Q4FY16

Q1FY17

Q2FY17

Q3FY17

Q4FY17

Q1FY18

Q2FY18

Q3FY18

Q4FY18

(In

| c

rore)




Exhibit 7: Model wise standalone sales volume break-up

19.7 21.9 20.3 23.0 24.3

18.8

21.919.6

24.7

31.67.8

6.09.6

8.4

8.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0


(In

MS

M)



Exhibit 8: Revenue break-up

624739

632 715 755

798

877

694

876

1120

368142

202

176

167

0

500

1000

1500

2000

2500


(|

crore)



Exhibit 9: Consolidated EBITDA and EBITDA margin trend

222.8

269.7

135.3

230.6

181.4

7.9

13.3

10.6

11.1

11.5

0

100

200

300

FY16 FY17 FY18E FY19E FY20E

(|

crore)

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

13.0

14.0

(%

)


Exhibit 10: Consolidated PBT, PAT margin trend

122.8

147.7

190.8

64.7

112.1

77.5

97.6

126.8

101.2

180.6

10.5

7.27.3

8.1

5.9

0

50

100

150

200

250

FY16 FY17 FY18P FY19E FY20E

(|

crore)

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

(%

)

PBT PAT PBT Margin


EBITDA margins are expected to improve 90 bps to 11.5%

over FY18-20E

We envisage PAT will post healthy growth of 27.9% CAGR

during FY18-20E to | 126.3 crore


Exhibit 11: Consolidated leverage

0.6

0.8

0.9

0.8

0.6

0.0

0.2

0.4

0.6

0.8

1.0

FY16 FY17 FY18E FY19E FY20E

(x)


Exhibit 12: Consolidated working capital days

45

79

102 103101

25

50

75

100

125


(D

ays)


Exhibit 13: Healthy return ratios

21.4

13.3

14.8

19.2

12.2

13.915.1

16.615.5

16.1

9.0

12.0

15.0

18.0

21.0

24.0

27.0


(%

)

RoE RoCE



Valuation

Somany has exhibited impressive revenue and earnings growth of 15.6%

and 29.7%, respectively, in FY12-17 led by its capacity expansion and by

moving to the high value vitrified tiles. RoCE also improved to ~20.3% in

FY17 from ~12.8% in FY14 while net leverage has reduced to ~0.2x in

FY17, from 1.7x in FY11. However, FY18 has been one-off year as

company faced host of issues including SAP implementation issues, fall in

GVT prices post Vibrant Gujarat exhibition, delay in implementation of e-

way bill and rise in gas prices. However, the management is confident of

exhibiting reasonable double digit volume growth in FY19E. Furthermore,

given its focus on the asset light strategy such as JV with local players,

healthy growth is expected to come.

Somany would be a long term beneficiary of GST implementation as it

would reduce the pricing differential between organised & unorganised

tiles. Further, GST would create a level playing field for organised players

However, the anticipated shift towards organised pie has not panned out

as anticipated and margins continue to remain under pressure with rising

fuel prices. Hence, we continue to maintain our HOLD rating on the stock

with a revised target price of | 600 (~20x FY20E EPS).

Exhibit 14: Valuation metrics

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE

(| cr) (%) (|) (%) (x) (x) (%) (%)

FY17 1,727.8 5.9 26.4 42.2 20.8 11.4 21.4 19.2

FY18E 1,708.2 (1.1) 18.3 (30.9) 30.1 15.1 13.3 12.2

FY19E 2,014.0 17.9 23.0 25.9 23.9 12.1 14.8 13.9

FY20E 2,342.1 16.3 29.9 29.9 18.4 10.0 16.6 16.1


Exhibit 15: One year forward P/E chart

0

300

600

900

1,200

May-12

Nov-12

May-13

Nov-13

May-14

Nov-14

May-15

Nov-15

May-16

Nov-16

May-17

Nov-17

May-18

Pric

e (

|)

Price 8x 16x 24x 32x 40x


We value the stock at 25x FY20E EPS and ascribe a target

price of | 600


Recommendation History vs. Consensus…

0

250

500

750

1,000

May-18Feb-18Nov-17Sep-17Jun-17Mar-17Dec-16Sep-16Jun-16Mar-16Dec-15Sep-15Jun-15Apr-15

(|

)

0.0

20.0

40.0

60.0

80.0

100.0

(%

)

Price Idirect target Consensus Target Mean % Consensus with BUY

Source: Bloomberg, Company, ICICI Direct Research

Key events

Date Event

Oct-13 Acquires 26% stake each in Vicon & Acer and 51% stake in Amora

Mar-15 Approves plan to raise up to | 150 crore through issuance of securities

Jun-15 Gujarat government reduces price of natural gas by | 2.8 per standard cubic metre (SCM) from | 31.8 SCM to | 29 per SCM

Aug-15 Gears up to establish a new factory in Seemandhra for producing tiles currently having a capacity of 22 MSM excluding outsourced business and JV

Aug-15 The government declares its plan to convert 98 Indian cities into Smart Cities, which will lead to an increase in demand of building materials

Dec-15 Raises | 120 crore via a Qualified Institutional Placement (QIP) issue to fund its capacity expansion

Jan-16 Issues commercial papers of | 25 crore having maturity on March 25, 2016

Feb-16 Crisil upgrades long term rating of Somany Ceramics from CRISIL A/Stable to CRISIL A+/Stable

Feb-16 Invests ~| 80 crore on greenfield expansion of glazed vitrified tiles at its existing Kassar plant. This expansion would increase its Kassar plant's capacity from 13.13

MSM (Million Square Metres) to ~17.3 MSM

Mar-16 Government imposes anti-dumping duty of US $1.37 per square metre on all vitrified tiles from China for six months

Oct-16 The provisional anti-dumping duty imposed on import of vitrified tiles from China has lapsed in September, 2016


Top 10 Shareholders Shareholding Pattern

Rank Name Latest Filing Date % O/S Position (m) Change (m)

1 Bhilwara Holdings, Ltd. 31-Mar-18 21.7% 9.2 0.0

2 Sarvottam Vanijya, Ltd. 31-Mar-18 14.9% 6.3 0.0

3 Scope Vinimoy Pvt. Ltd. 31-Mar-18 8.4% 3.6 0.0

4 DSP BlackRock Investment Managers Pvt. Ltd. 31-Mar-18 5.6% 2.4 -0.2

5 Franklin Templeton Asset Management (India) Pvt. Ltd. 31-Mar-18 4.7% 2.0 0.0

6 L&T Investment Management Limited 31-Mar-18 4.3% 1.8 0.1

7 Somany (Shrivastsa) 31-Mar-18 3.1% 1.3 0.0

8 Kotak Mahindra Old Mutual Life Insurance, Ltd. 31-Mar-18 2.9% 1.2 0.0

9 Hind Strategic Investment 31-Mar-18 2.5% 1.1 0.0

10 Aditya Birla Sun Life AMC Limited 31-Mar-18 2.5% 1.1 0.1

(in %) Sep-17 Dec-17 Mar-18

Promoter 51.5 51.5 51.5

Public 48.5 48.5 48.5

Others 0.0 0.0 0.0

Total 100.0 100.0 100.0

Source: Reuters, ICICI Direct Research

Recent Activity

Investor name Value Shares Investor name Value Shares

L&T Investment Management Limited 1.4 0.1 DSP BlackRock Investment Managers Pvt. Ltd. -1.8 -0.2

Aditya Birla Sun Life AMC Limited 1.0 0.1 BNP Paribas Asset Management India Pvt. Ltd. -1.4 -0.1

Reliance Nippon Life Asset Management Limited 0.5 0.0 Grandeur Peak Global Advisors, LLC -1.1 -0.1

Alquity Investment Management Ltd. 0.5 0.0 Somany (Shreekant) -0.5 0.0

Wasatch Advisors, Inc. 0.3 0.0 PineBridge India Private Limited -0.5 0.0

Buys Sells

Source: Reuters, ICICI Direct Research


Financial summary

Profit and loss statement (| Crore)

(Year-end March) FY17 FY18P FY19E FY20E

Net Sales 1,727.8 1,708.2 2,014.0 2,342.1

Other Income 17.2 18.1 9.4 9.5

Total Revenue 1,745.0 1,726.3 2,023.3 2,351.6

Raw Material Expense 469.0 455.7 491.4 522.2

Purchase of Traded Goods 236.8 289.4 423.0 585.3

(Increase)/Decrease in Inventories 1.2 (38.2) (42.3) (46.6)

Employee benefit expenses 192.2 217.5 245.4 275.4

Other Expenses 598.0 602.5 673.6 736.1

Total Operating Expenditure 1,497.2 1,526.9 1,791.2 2,072.4

EBITDA 230.6 181.4 222.8 269.7

Interest 39.0 39.9 46.3 49.0

Depreciation 31.3 41.3 44.0 46.7

PBT 180.6 122.8 147.7 190.8

Total Tax 61.5 39.3 48.7 63.0

PAT before MI 115.0 79.1 98.9 127.8

Minority Interest 5.3 3.6 3.6 3.6

PAT after MI 109.7 75.5 95.3 124.2

Profit from Associates 2.4 2.0 2.3 2.6

PAT 112.1 77.5 97.6 126.8

YoY growth 73.3% -30.9% 25.9% 29.9%

EPS (Diluted) 26.4 18.3 23.0 29.9


Cash flow statement (| Crore)

(Year-end March) FY17 FY18E FY19E FY20E

Profit after Tax 112.1 77.5 97.6 126.8

Depreciation 31.3 41.3 44.0 46.7

Interest Paid 39.0 39.9 46.3 49.0

Cash Flow before WC changes 172.2 146.6 179.9 214.1

Net Increase in Current Assets (188.4) (122.5) (141.3) (137.5)

Net Increase in Current Liabilities 22.6 22.8 55.6 58.1

Net CF from Operating Activities 6.3 46.9 94.1 134.7

(Purchase)/Sale of Fixed Assets (175.1) (152.3) (4.8) (60.0)

Intangible assets and CWIP (53.0) 21.5 (0.0) -

LT liability, provision, MI and DTL 84.6 16.8 3.6 3.6

Investments (8.8) 8.7 - -

Profit in Joint Venture (2.9) (1.6) (1.4) (1.0)

Net CF from Investing Activities (138.0) (88.9) 6.8 (47.9)

Proceeds from LT Borrowings 196.6 99.6 (25.0) (25.0)

Dividend and Dividend Tax (13.8) (13.8) (17.3) (22.5)

Interest Paid (39.0) (39.9) (46.3) (49.0)

Net CF from Financing Activities 143.9 46.0 (88.7) (96.5)

Net Cash flow 23.3 4.0 12.3 (9.7)

Opening Cash/ Cash Equivalent 18.3 24.0 13.6 25.9

Closing Cash/ Cash Equivalent 24.0 13.6 25.9 16.2


Balance sheet (| Crore)

(Year-end March) FY17 FY18P FY19E FY20E

Liabilities

Share Capital 8.5 8.5 8.5 8.5

Reserves & Surplus 515.7 572.2 652.4 756.7

Total Shareholders funds

Secured Loan 440.0 539.6 514.6 489.6

Unsecured Loan - - - -

Total Debt

Deferred Tax Liability 47.4 52.4 52.4 52.4

Minority Interest 83.4 95.9 99.6 103.2

Other Long Term Liabilities 26.1 25.1 25.1 25.1

Long Term Provisions 4.4 4.8 4.8 4.8

Liability side total 1,126 1,299 1,357 1,440

Assets

Gross Block 803.4 958.6 963.4 1,023.4

Net Block 522.2 636.1 596.9 610.1

Capital WIP 52.2 27.9 27.9 27.9

Non-current Investments - - - -

Long-term loans and advances 12.6 11.0 11.0 11.0

Inventories 220.8 259.7 306.2 349.7

Sundry Debtors 426.8 503.7 588.4 671.4

Loans and Advances 11.6 13.4 15.8 18.4

Other Current Assets 38.9 43.7 51.5 59.9

Cash 24.0 13.6 25.9 16.2

Total Current Assets 840.7 948.3 1,102.0 1,229.8

Creditors 163.7 233.2 263.9 300.4

Provisions 1.2 0.7 6.4 7.5

Other Current Liabilities 152.9 106.8 125.9 146.4

Total Current Liabilities 317.8 340.6 396.2 454.3

Net Current Assets 522.9 607.7 705.8 775.5

Assets side total 1,126 1,299 1,357 1,440


Key ratios (| Crore)

(Year-end March) FY17 FY18E FY19E FY20E

Per Share Data

EPS 26.4 18.3 23.0 29.9

Cash EPS 33.8 28.0 33.4 40.9

BV 123.6 137.0 155.9 180.5

Revenue per Share 407.5 402.9 475.0 552.4

Dividend per share 2.7 2.7 3.4 4.4

Operating Ratios

EBITDA / Total Operating Income 13.3 10.6 11.0 11.5

PAT / Total Operating Income 6.5 4.5 4.8 5.4

Inventory Days 47 55 55 54

Debtor Days 90 108 107 105

Creditor Days 35 50 48 47

Return Ratios

RoE 21.4 13.3 14.8 16.6

RoCE 19.2 12.2 13.9 16.1

RoIC 21.4 12.3 15.0 17.4

Valuation Ratios

EV / EBITDA 11.4 15.1 12.1 10.0

P/E 20.8 30.1 23.9 18.4

EV / Net Sales 1.5 1.6 1.3 1.1

Market Cap / Sales 1.3 1.4 1.2 1.0

Price to Book Value 4.4 4.0 3.5 3.0

Turnover Ratios

Asset turnover 1.5 1.3 1.5 1.6

Gross Block Turnover 2.1 1.8 2.1 2.3

Solvency Ratios

Net Debt / Equity 0.6 0.7 0.6 0.5

Current Ratio 2.2 2.4 2.5 2.4

Debt / EBITDA 1.9 3.0 2.3 1.8

Quick Ratio 1.5 1.7 1.7 1.7



ICICI Direct Research Coverage Universe (Building Materials - Tiles)

CMP M Cap

(|) TP(|) Rating (| Cr) FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E

Kajaria Ceramics (KAJCER) 564 550 Hold 8978 15.9 14.8 17.6 34.4 37.0 31.1 17.8 19.2 16.7 7.4 6.4 5.6 21.5 17.4 17.9

Somany Ceramics (SPLIND) 550 600 Hold 2332 26.4 18.3 23.0 20.8 30.1 23.9 11.4 15.1 12.1 4.4 4.0 3.5 21.4 13.3 14.8

P/B (x) RoE (%)

Sector / Company

EPS (|) P/E (x) EV/EBITDA (x)



RATING RATIONALE

ICICI Direct Research endeavours to provide objective opinions and recommendations. ICICI Direct Research

assigns ratings to its stocks according to their notional target price vs. current market price and then

categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and

the notional target price is defined as the analysts' valuation for a stock.

Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;

Buy: >10%/15% for large caps/midcaps, respectively;

Hold: Up to +/-10%;

Sell: -10% or more;

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]


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may 28, 2018 somany ceramics (somcer) |...

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