Buy Somany Ceramics, target price Rs 730: HDFC Securities

HDFC Securities has a buy call on Somany Ceramics with a target price of Rs 730. The current market price of Somany Ceramics is Rs 403.1.

Financials The building materials sector experienced a soft demand in Q4FY25. HDFC Securities projects a 4% YoY revenue growth for our coverage universe, driven by volume growth. However, they estimate a 10% YoY decline in EBITDA and a 22% YoY decrease in APAT.



This is attributed to heightened competition in the pipes segment, weak pricing in the tiles segment, and elevated timber prices impacting the wood segment. The brokerage believes that the volume growth of major tile companies was negatively affected by weak export performance. Their pipes coverage universe is expected to report a subdued volume growth of 4% YoY.

Amidst the intense competition and potential inventory losses, the margins of pipe companies are likely to be under pressure. Wood companies will face challenges due to the sustained high timber prices. Looking ahead to FY26, they anticipate a healthy demand in both the pipes and wood panel segments.

In the tiles segment, HDFC Securities predicts that the unorganized Morbi will hamper industry leaders? growth. Tile demand experienced a muted quarter, affected by subdued exports. The brokerage anticipates that market leaders Kajaria Ceramics and Somany Ceramics will report a volume growth of 8% and 4%, respectively, in Q4, translating to a two-year CAGR of 7% and 6%.

Tile realisations and gas prices remained stable on a QoQ basis..