Anyone looked at Somany Ceramics


(Ravikanth Kanamarlapudi) #1

Somany Ceramics is one among the leading manufacturers of ceramic and vitrified tiles in India. Revenues and Net Profit have increased consistently up to 2011. Last two quarters did saw YoY negative growth in profits (need to check with the management). Approximately 50% of its sales come from own manufacturing while the rest come from outsourced manufacturing.

Improved Industry Prospects: Industry prospects have improved since FY10, with Govt. slapping import duty on ceramics tiles from China.

Some Positives:

  • Historical PE is less than 6x as against approx. 20x for Kajaria Ceramics
  • Per unit capex cost is among the lowest (lower than Kajaria)
  • Consistently growing
  • First ever patent on increasing durability in the Indian Ceramic industry. This is helping in acquiring corporate clients in their retail expansion
  • Focus on increasing value addition such as glazed, polished vitrified tiles. Entered partnerships to import premium tiles catering to high end market

Some Concerns:

  • EBITDA margins are much lower than Kajaria Ceramics (Top Player)
  • Debt equity ratio is near 2:1
  • EBITDA margins fell in the recent last two quarters

Please let me know your thoughts on this stock


(Saurabh Srivastava) #2

Ravi,

Nitco probably is also worth a look in this space. After the DRI fiasco in 2009, these folks have put a professional management in place. And also have considerable real estate which is being developed.


(Ragupati Chandrasekaran) #3

Ravi,

While I do not wish to derail this thread, I thought Saurabh’s comment on Nitco was worth following up on based on a Q&A with the CEO Anil Goel in the 2011-12 annual report.

The complete Q&A is well worth reading, but this comment on the discrepancy between market price (current market cap of roughly Rs. 77 cr.) and intrinsic value is especially interesting:

“[…] We are painfully aware that our market capitalization at less than Rs. 100 crore is way below the intrinsic value of our brand and undeveloped real estate portfolio. […]” (emphasis supplied)

Rare is the CEO who doesn’t think his/her company’s stock is undervalued, but Anil Goel’s comments above strike me as being sincere.

Best,

Ragu


(Shashi) #4

Debt is very high , Real estate is suffering from hiccups .Earning visibility is low .


(Atul Garg) #5

Hi Ravikanth,

Congratulations. somany seems to be catching up.

I am not invested in Somany (invested in Kajaria though) for the reasons as low margins, high debts, which might change going forward if they can improve efficiencies and reduce debts.


(Atul Garg) #6

A CRISIL report on somany

http://www.moneycontrol.com/news/crisil-research/somany-ceramics-value-added-products-to-drive-growth_800362.html


(Vishnu Ch) #7

CONFERENCE CALL

Somany Ceramics

PBT margin will improve further in FY’14 due to focus on more value added products

The company held its conference call on 17thJan’13 and was addressed by Mr. Abhishek Somany Jt. MD

Key highlights

  • Somany Ceramics sold about 8.29 M sq meter of ceramic tiles during the quarter. The sales volume for Q3 FY’13 grew by 6% y.o.y, while rest of 17% growth came from higher realization from value added products y.o.y.
  • As per the management, Q3 despite seasonally lean quarter, the performance was very satisfactory. Going forward, better results in terms of volume and value growth is expected in Q4 FY’13.
  • There is no pressure on volume side in tiles business and some of the construction side private and government parties are doing extremely well.
  • In Q3 FY’13, only part of the efforts taken by the management in terms of debottleneck of its capacities and sale of more value added product was visible and the full effect will be visible in Q4 and in FY’14.
  • The company was able to increase the utilization of capacities of its two JV’s namely the Vintage tiles and Commander Vitrified tiles, from about 80% to about 100% during the quarter. Today, of the 180 thousand sq meter of Vintage capacity about 80 thousand produced are value added products while rest are vanilla products. Similarly about 50% of Commander production is vanilla products. As per the management, the focus for FY’14 will be on shifting the production more towards value added products and markets is ready to digest them.
  • A further more polished vitrified tiles in form of higher value added product sale would be focused within Somany’s own manufacturing facility.
  • Management is open for some more acquisitions in and around Morbi area and also to increase the capacity of its existing JV partners.
  • Sanitary and Fittings would be about Rs 35 crore business by FY’13.
  • Imports currently are not much given the Rupee, where it is. Even some of the products, which company, imports have also come down by about 20%.
  • There has been some increase in gas prices and also offlate in Gujarat where the CNG and LPG prices have been recently moved upwards. As per the management, the power costs is under control and infact has come down y.o.y after the company started the power trading. Also higher sale of value added products offsets any gas price increases.
  • As far as other raw materials like clay, colours etc is concerned, management has indicated that there is no price increase of any of these raw material and also management does not expect any upward revision of raw material costs in near future.
  • Overall, with higher focus on more value added product sales going forward, management expects better PBT margin in FY’14.

Source: Capital Market


(Subash Nayak) #8

Good result from Somany: y-o-y figure

Sale up : 21%

EBITDA up: 9%

NP up: 20%


(Hemant V Bhatia) #9

Mr. Abhishek Somany, Joint Managing Director of the Company, addressed the conference call. Key highlights By Capital Mkt;

  • The Company sales volume and value growth affected significantly in 3Q’FY14 due to downhill journey of the construction and real estate sector. In addition, a month long shutdown of all units in Morbi (Gujarat) due to a strike by the tile manufacturers between November and December brought company’s tiles outsourcing business to a standstill during that period.
  • The Company has reported 41% decline in net profit to Rs 4.78 crore despite 6% jump in sales revenue to Rs 284.16 crore for the third quarter ended December 31, 2013.
  • The Company has posted 7% YoY sales value growth in Q3FY14. The revenue mix was Rs 160.55 crore from own manufacturing, Rs 47.67 crore from JVs and Rs 92.74 crore from outsourcings.
  • The Company institutional sales came around 35% of total and balance 65% came from dealers.
  • The Company tiles business sales volume grew by 3.1% YoY to 8.55 million sqm in Q3FY14. The sales volume mix was 4.83 mn sqm from own manufacturing, 0.91 mn sqm from JVs and 2.81 mn sqm from others.
  • The company has posted 5.4% YoY growth in revenue from tiles business to Rs 287.62 crore in Q3FY14. The sales value mix: Rs 168.90 crore from Ceramics tiles, Rs 75.92 crore from Polished Vitrified tiles and Rs 42.80 crore from Glazed Vitrified tiles.
  • The Company inventory level were under 45 days and receivable were under 45 days as on December 31, 2013. On value wise, the total inventory was Rs 124 crore (including finished goods) and total receivable was Rs 150 crore.
  • The Company has launched large format 800x1200 mm glazed vitrified tiles and âSlip Shield’ tile.
  • The Company has added 8 showrooms, taking the total to 213 retail showrooms (mainly franchisee), and added 47 dealers, taking the total to 1896 dealers during the quarter to further strengthen distribution network.
  • The Company expects with Morbi now stabilizing post shutdown, the outlook for the current quarter has improved. Moreover the shutdown has resulted in Morbi units and organised sector to come on a level playing field as far as usage of fuel is concerned.
  • The Company expects 20% revenue growth in medium term (2-3 years). The blend would be 12% by volume wise and rest 8% would contributed by value wise.
  • The Company is in the process of raising Rs. 49,99,99,990 by way of preferential allotment of 43,47,826 equity at a price of Rs. 115/- (including premium of Rs. 113/-) per share shares to Mauritius based Latinia Limited, an affiliate of Creador II LLC. The money so raised will be utilized judiciously to meet the existing and future funds requirements of the business.

Status of Joint Ventures

Vintage Tiles Private Ltd. (Existing)

  • Acquired 26% equity stake adding capacity of ~2.65 mn sqm per annum of polished vitrified tiles.
  • Commenced production in January, 2012.
  • Proposed capacity expansion of 2.65 mn sqm of polished vitrified tiles is expected by the middle of next year.

Commander Vitrified Private Ltd. (Existing)

  • Acquired 26% equity stake adding capacity of ~2.65 mn sqm per annum of polished/ glazed vitrified tiles.
  • Commenced production in June, 2012.
  • Capacity expansion to produce additional ~3.50 mn sqm of polished vitrified tiles completed and production started from 26th December, 2013.

Amora Tiles Private Ltd. (New)

  • Proposed to acquire 51% stake in equity stake adding capacity of ~2.45 mn sqm per annum of ceramic wall tiles.
  • Commissioning in March, 2014.

Vicon Ceramics Private Ltd. (New)

  • Acquired 26% stake in equity adding capacity of ~2.10 mn sqm per annum of industrial vitrified tiles (1st phase).
  • Commissioning of 1st phase in April, 2014.

Acer Granito Private Ltd. (New)

  • Acquired 26% stake in equity adding capacity of ~2.10 mn sqm per annum of polished vitrified tiles.
  • Proposed capacity expansion of ~3.00 mn sqm per annum of polished vitrified tiles.
  • Expectedcommissioning in July, 2014.

(Hemant V Bhatia) #10

**Mr. Abhishek Somany, Jt MD of Co, add the con call.**Key highlights by Capital Mkt

  • The company maintains its strategy to expand through the JV Model to keep Balance Sheet lean and expand revenues and profitability faster. The company tile sale volume stood at 10.20 msm in Q2FY15, higher by 8.6% from 9.39 msm corresponding previous quarter. For H1FY15, tile sale volume jumped 12.1% to 19.59 msm. Of the total sales, 41% contributed by the company own manufacturing, while 35% of total sales came from JV and remaining 24% of total sales generated from outsource/others.
  • The net profit of the company grew robust 68% YoY to Rs 10.50 crore in Q2FY15 on the back of 22% increase in net sales to Rs 370.24 crore. EBITDA grew by 30% to Rs 25.59 crore. For H1FY15, the Company net profit jumped 54% to Rs 4.78 crore on net sales raising 24.3% to Rs 698.54 crore. EBITDA was up 22% to Rs 46.64 crore for H1FY15.The Company gross revenue grew 22.7% YoY to Rs 386.98 crore in Q2FY15. The revenue mix was Rs 158.98 crore from own manufacturing, Rs 141.02 crore from JVs, and Rs 86.98 crore from outsourcings. For H1FY15, the Company gross sales revenue grew 23.2% YoY to Rs 730.73 crore. The revenue mix was Rs 301.22 crore from own manufacturing, Rs 255.24 crore from JVs and Rs 174.27 crore from outsourcings.
  • The Company tiles business sales volume achieved growth of 8.6% YoY to 10.20 million sqm in Q2FY15. The sales volume mix was 4.66 mn sqm from own manufacturing, 3.43 mn sqm from JVs and 2.11 mn sqm from others. For H1FY15, the Company tiles business sales volume grew by 12.1% YoY to 19.59 million sqm. The sales volume mix was 8.87 mn sqm from own manufacturing, 6.14 mn sqm from JVs and 4.58 mn sqm from others.The company has added 40 dealers and 10 showrooms/display centers during the quarter. Geographical Sales â North (39%), South (29%), West (11%), East (17%), Exports (4%). Sanitaryware and bath fittings sales grew by 83% to Rs. 35.84 crores. Exports for the quarter almost doubled to Rs. 17.79 crore.The Company working capital cycle declined from 37 days in FY14 to 34 days in H1FY15 (excludes current investment of Rs 37 crore in FY14 and Rs 34.78 crore in H1FY15). Meanwhile, leverage ratio was down from 0.8 in FY14 to 0.7 in H1FY15.
    **

Future Plans

**

  • The Company plans to a) Access to ~55 msm capacity by March 2015, b) increase stake in Sonec Sanitary Ware to 51% from 26% equity stake, c) and expansion of existing sanitary ware capacity.
    **

Outlook

**

  • The company expects Buildings Material industry and Tiles sector in particular in a sweet spot going forward owing to government various initiatives and expected economic upturn.

Industry is very gung-ho on the scope of opportunities presented by the Government through the âSwachh Abhiyan’ scheme. Meanwhile, government plans for creation of smart cities and improving infrastructure focus also likely to keep the sector buoyant. Also, Contracting Gas prices YoY with a stable outlook to augur well for industry. Sales & Distribution channels coupled with Marketing & Advertising likely to play a big role in influencing consumer preferences thereby benefitting Branded players. Levy of anti-dumping on Chinese Tiles by European countries along with favorable currency rates make exports a lucrative opportunity.

  • **Government Initiatives for Infrastructure development are:**A) Swachh Bharat Abhiyan (SBA) â to make rural areas “open defecation free”- ODF by enabling construction of individual, cluster & community toilets. B) Development of 100 smart cities as satellite towns of larger cities. C) Development of Industrial corridors. D) Housing for all by 2022. E) Rural housing fund under National Housing Board (NHB).
  • **Corporate India plans for SBA are:**A) Coal India to spend Rs. 2.35bn on building toilets and improving sanitation. B) Bharti foundation to spend Rs. 1bn for building toilets over the next 3 years. C) TCS has pledged Rs. 1bn towards sanitation facilities for girl students. D) HUL plans to construct 24,000 toilets by 2015. E) ITC plans to construct 10,000 toilets. E) Vedanta group announced to build 10,000 more toilets. F) Aditya Birla Center plans to build 10,000 toilets in MP, UP, TN and Gujarat. G) L&T committed to build 5,000 toilets under L&T Public Charitable Trust. H) GAIL to spend Rs 270mn for building toilets. I) Dabur & NBCC plans to build 100 toilets each in rural areas & for girls students, respectively.

(Vishnu Ch) #11

Corporate Video of Somany Ceramics released 5 days ago on their youtube channel.

https://www.youtube.com/watch?v=sKdq93iTmCs

Though outdated, an excellent Analysis on the Indian Ceramic Industry (from Dec 2012)

http://www.slideshare.net/Shaktidodiya/strategic-analysis-of-indian-ceranic-tiles-indusry

Story is still very promising, desipite the run-up.

Apart from the obvious tailwinds from the Swachch Bharat Abhiyan (SBA) move by the Govt., there is lot more in favour of Somany Ceramics.

Following observations from the video were:

1). Ambitious plans from the Management to be a global brand in next 3-5 years.

2). Aspirations for a premium branding, with tie-up to Spanish and Italian design firms which is also evidenced through their constant presence in industry-exhibitions around the world.

3). India (as of 2012) was not in Top 10 exporters list. Digital Tiles, Spanish and Italian design firm tie-ups (which also incidentally were the Top 2nd and 3rd exporters) imply the end-game is to be the top exporter of tiles.

Disc: Invested since July 2013.

This is not a recommendation, and do your own due diligence.


(Vishnu Ch) #12

Corporate Video of Somany Ceramics released 5 days ago on their youtube channel.

https://www.youtube.com/watch?v=sKdq93iTmCs

Though outdated, an excellent Analysis on the Indian Ceramic Industry (from Dec 2012)

http://www.slideshare.net/Shaktidodiya/strategic-analysis-of-indian-ceranic-tiles-indusry

Story is still very promising, desipite the run-up.

Apart from the obvious tailwinds from the Swachch Bharat Abhiyan (SBA) move by the Govt., there is lot more in favour of Somany Ceramics.

Following observations from the video were:

1). Ambitious plans from the Management to be a global brand in next 3-5 years.

2). Aspirations for a premium branding, with tie-up to Spanish and Italian design firms which is also evidenced through their constant presence in industry-exhibitions around the world.

3). India (as of 2012) was not in Top 10 exporters list. Digital Tiles, Spanish and Italian design firm tie-ups (which also incidentally were the Top 2nd and 3rd exporters) imply the end-game is to be the top exporter of tiles.

Disc: Invested since July 2013.

This is not a recommendation, and do your own due diligence.


(Hemant V Bhatia) #13

**Mr. Abhishek Somany, Jt MD, & Mr. R.K. Lakhotia- VP (Finance) of the Co, add the conference call.**Key highlights by Capital Mkt;

  • The company maintains its strategy to expand through the JV Model to helped keep Balance Sheet lean and expand revenues and profitability faster. The company has recorded a growth of 20% volume wise and 9% value wise in Q3FY15.The company tile sale volume stood at 10.18 msm in Q3FY15, higher by 19% from 8.54 msm corresponding previous quarter. For 9MFY15, tile sale volume jumped 14% to 29.77 msm. Of the total sales, 40% contributed by the company own manufacturing, while 38% of total sales came from JV and remaining 22% of total sales generated from outsource/others.

Financial Performance

  • The net profit of the company zoomed 131% YoY to Rs 11.02 crore in Q3FY15 on the back of 31% increase in net sales to Rs 371.18 crore. EBITDA grew by 54% to Rs 26.77 crore. For 9MFY15, the Company net profit jumped 76% to Rs 29.59 crore on net sales raising 27% to Rs 1069.72 crore. EBITDA was up 32% to Rs 73.41 crore for 9MFY15.The Company gross revenue grew 28% YoY to Rs 386 crore in Q3FY15. The revenue mix was Rs 141 crore from own manufacturing, Rs 165 crore from JVs, and Rs 80 crore from outsourcings. For 9MFY15, the Company gross sales revenue grew 25% YoY to Rs 1117 crore. The revenue mix was Rs 442 crore from own manufacturing, Rs 420 crore from JVs and Rs 255 crore from outsourcings.

Operational Performance

  • The Company tiles business sales volumeachieved growth of 19% YoY to10.18million sqm in Q3FY15. The sales volume mix was 4.21 mn sqm from own manufacturing, 3.97 mn sqm from JVs and 2 mn sqm from others. For 9MFY15, the Company tiles business sales volume grew by 14% YoY to 29.77 million sqm. The sales volume mix was 13.08 mn sqm from own manufacturing, 10.11 mn sqm from JVs and 6.58 mn sqm from others.Geographical Sales â North (39%), South (28%), West (11%), East (17%), Exports (5%). Sanitaryware and bath fittings sales at Rs. 17.72 cr up by 47%. Exports for the quarter stood at Rs. 19.24 cr up by 223%.
  • The Company working capital cycle declined from 37 days in FY14 to 34 days in H1FY15 (excludes current investment of Rs 37 crore in FY14 and Rs 34.78 crore in H1FY15). Meanwhile, leverage ratio was down from 0.8 in FY14 to 0.7 in H1FY15.The Company maintains long term LNG pricing agreement, having 2 years price average with Gujarat and 5 years price average with Qatar. Thus, with softening of LNG prices, the Company expects to receive benefits of softening LNG prices M-o-M in next 18 months startingMarch 2015. The current LNG cost around $15.25per million British thermal units (mmBtu).

**Future Plans
**

  • The Company plans to a) Access to ~55 msm capacity by March 2015, b)Amora Tiles, a subsidiary company expanded by 2.44 msm per annum, c) Acer Granito, an associate company expanded by 3.06 msm per annum, and d) Expansion at Kadi plant for 2.40 msm per annum likely to commence in February, 2015

**Outlook
**

  • The Company expects topline growth of 18-20% in FY16 and will maintain a 0.5% Y-o-Y growth on profit before tax (PBT) margins. Capex likely around Rs 40-50 crore.The Company expects improving focus on infrastructure, housing for all, Swachh Bharat Abhiyan provide ample opportunities over a long term period.
  • Easing Interest rates bode well for Infrastructure, Real Estate sector; Building materials sector likely to witness pickup in volumes.
  • Gas prices have largely remained stable resulting in overall stable price regime for raw material prices for the industry.
  • Value added Tiles and increased product offering is benefitting Organized players as they have a competitive edge in the industry.
  • GST implementation is keenly watched as it will increase business efficiency thereby giving fillip to the Organized Tile manufacturers.

(Bhaskar Bora) #14

Kajaria is superior interms of growth and numbers


(Vishnu Ch) #15

Conference Call - from Capital markets

Expects to grow at 18-20% in FY16
Creation of Real Estate Regulatory Authority (RERA) bring in enormous investments to the sector and boosts demand for Buildings Material

The company has conducted a conference call on 19th May 2015to discuss the financial performance for the fourth quarter ended March 2015 and FY 2015 and way forward. Mr. Abhishek Somany, Joint Managing Director of the Company, addressed the conference call.

Key highlights

Financial Performance

The net profit of the company zoomed 32% YoY to Rs 14.8 crore in Q4FY15 on the back of 12% increase in net sales to Rs 455.6 crore. PBT grew by 7.2% to Rs 19.9 crore with margin at 4.4%. For FY15, the Company net profit jumped 59% to Rs 44.49 crore on net sales raising 22% to Rs 1531.3 crore. PBT margin recorded at 4.3%for FY15.
The Company gross revenue grew 11% YoY to Rs 475.3 crore in Q4FY15. The revenue mix was Rs 178.7 crore from own manufacturing, Rs 188.8 crore from JVs, and Rs 107.8 crore from outsourcings. For FY15, the Company gross sales revenue grew 21% YoY to Rs 1598.3 crore. The revenue mix was Rs 623.5 crore from own manufacturing, Rs 611.3 crore from JVs and Rs 363.6 crore from outsourcings.
Geographical Sales for FY15– North (39%), South (29%), West (12%), East (16%), and Exports (4%). Sanitaryware and bath fittings sales at Rs 25.4 crore for Q4FY15 and Rs 79.3 crore for FY15.
Exports stood at Rs 13.9 crore for Q4FY15 and Rs 64.3 crore for FY15.
The Company working capital cycle (excluding current investment) increased to 39 days in FY15 from 37 days in FY14. Meanwhile, leverage ratio declined to 0.7% in FY15 from 0.8 in FY14.
The Company board has recommended a 100% Dividend of Rs. 2/- per equity Share representing a payout of 21%

Operational Performance

The Company tiles business sales volume achieved growth of 6.1% YoY to12.6million sqm in Q4FY15. The sales volume mix was 5.6 mn sqm from own manufacturing, 4.4 mn sqm from JVs and 2.6 mn sqm from others. For FY15, the Company tiles business sales volume grew by 11.8% YoY to 42.4 million sqm. The sales volume mix in FY15 was 18.6 mn sqm from own manufacturing, 14.5 mn sqm from JVs and 9.2 mn sqm from others. The sales volume mix in FY15 was 39% from own manufacturing, 38% from JVs and 23% from others.

Capacity Expansion

The Company plans to increase capacity to increase to ~56 msm p.a. in FY16 from current capacity at ~52 msm p.a.
The Company expansion of 2.40 msm p.a. of ceramic tiles at Kadi plant, Gujarat was completed and production started in February, 2015. The Board has given approval for expansion of capacities at Kasar, Haryana by 4 msm p.a.

Real Estate Bill –Instilling Confidence

Creation of Real Estate Regulatory Authority (RERA) will help co-ordinate the development of the sector and promote efficiency and level playing ground for all stakeholders. Mandatory public disclosure of registered properties, disclosure of pro-forma agreements, reduction in diversion of funds paid by buyers, consent for alteration of plans are key provisions that will bring increased trust & faith in the sector. RERA aims to bring clarity on a sector marred with opaqueness, a move that will boost domestic & foreign investment in the sector helping Government to achieve its vision of Housing for All by 2022. RERA provides for fast-track dispute resolutions through adjudicating officers (district judge) and through creation of Appellate Tribunal, providing immense comfort to common buyers.

Outlook

The Company expects clearances of large infrastructure projects,setting up large warehouses by E-commerce companies-and a cautious positive mood to give a fillip to Buildings Material sector.
The Company expects stable Currency & Gas price, decline in cost of borrowing below 10% p.a. for Real Estate home buyers, and increase focus on better quality and R&D investment will also bode well for Buildings Material Industry.
The Company expects RERA (cleared by Union Cabinet) will boost the confidence of buyers, bring in enormous investments back to the sector ultimately creating a ‘Game Changing Moment’ for Buildings Material Players.
The Company expects Buildings Material sector to grow 11-12% in H1FY16 and 12-13% in H2FY16 and the company (Somany Ceramics) to grow 5-6% above the industry growth.
The Company plans a capex of around Rs 130-140 crore for next two years (FY16 to FY17).
The Company expects PBT margin to increase going ahead due to rise in joint venture (JV). The company expects JV manufacturing will rise from 58% in FY15 to 61% in FY16 and to 63% in FY17.

Disc: Invested.


(Hemant V Bhatia) #16

Mr.Abhishek Somany, Jt MD add the call.Key highlights by Capital Mkt
Financial Performance
The Company has delivered decent set of numbers maintaining its tradition of growth above the industry average. The state of real estate and in turn building and construction material industry remained sluggish. The growth of net sales during the quarter was 18.6%, meanwhile the EBIDTA, PBT and PAT growth also climbed at 20.1%, 31.7% and 30%, respectively. The reason for growth was a higher volume in the market and also the focused concentrated thrust on high value added products which is the glazed vitrified and polished vitrified.Net sales of the Company grew 18.6% YoY to Rs 391.46 crore in Q1FY16. The PBT jumped by 31.7% to Rs 16.08 crore with margin at 4.1%. The net profit zoomed by 30% to Rs 10.49 crore.The Company gross revenue grew 18% YoY to Rs 408 crore in Q1FY16. The revenue mix was Rs 147 crore from own manufacturing, Rs 167 crore from JVs, and Rs 94 crore from outsourcings. Sales mix– Own manufacturing (36%), JV (41%) and Others (23%).Geographical Sales for Q1FY16– North (40%), South (28%), West (11%), East (15%), and Exports (6%). Sanitaryware and bath fittings sales at grew by 35.5% to Rs 20.89 crore for Q1FY16.Exports jumped sharply 77.5% to Rs 23.75 crore for Q1FY16.
Operational Performance - The Company tiles business sales volumegrew 14.1% YoY to10.71million square meters (msm) in Q1FY16. The sales volume mix was 4.53 msm from own manufacturing, 3.94 msm from JVs and 2.24 msm from others.
Capacity Expansion- 1) The Company plans to add 8-9 msm by the end of FY16 from current capacity of ~52 msm p.a.2) Somany Fine Vitrified Private, a subsidiary company expected to commence production of 4.29 msm p.a. of polished vitrified tiles in October 2015. 3)The Company brown field expansion at Kassar plant to produce 4.00 msm of glazed vitrified tiles is expected to be commissioned in Q1FY17.
Outlook-The Company plans to add additional tile manufacturing capacityof ~8 million square meters per annum within next twelve months post to sustain the growth momentum in future. Though there is an air of cautious optimism around Indian economy, Somany is optimistic about its future growth prospects in general and building and construction material industryin particular especially in the backdrop of various initiatives being taken by the incumbent government which would fructify in near future.The Company expects Government plans for smart cities, dedicated freight corridor, Swachh Bharat Abhiyan, and housing for all will also bode well for Buildings Material Industry.Swachh Bharat Abhiyan is government pet project which aims to improve the sanitation facility in the country & aims to make India Open Defacation Free (ODF)& will drive demand for Tiles & Sanitaryware. Large corporate investments as part of CSR to strengthen the initiative will boost demand prospects. Government aims to provide housing for all by 2022 which will require an investment of $2 trillion in providing ~11crore houses and will catapult the demand for Building materials.Smart Cities Offers opportunities to building materials industry through varied measures such as Increased Infrastructure in terms of roads, houses, green spaces, education institutions, improved services to citizens.The Company expects topline growth of around 18-20% in FY 2016. The Company is bullish to grow 5-6 percentage points above the industry average–this fiscal.


(Hemant V Bhatia) #17

Mr. Abhishek Somany, Jt MD, addr the call.Highlights by Capital Mkt
The Company has delivered decent set of numbers maintaining positive trajectory on Volume growth and market share gain despite seasonally lower Q2 and first half and challenging demand environment. The Company strong Brand has helped to maintain Business momentum.Loss in volumes due to truck strike in late September and an exceptional loss of Rs 3.8 crore pertaining to last year impacted the second quarter earnings. The Company lost out of about Rs 22-23 crore of sale partly on the 29th and on the 30th on non-availability of trucks. The Company has paid Rs 3.83 crore to GAIL India towards one time settlement of ‘Pay for If Not Taken Obligation’ for CY14.Net sales of the Company grew 8.4% YoY to Rs 403.33 crore in Q2FY 2016 and rose 13.2% to Rs. 794.79 crore in H1FY 2016. Q2FY 2016 PBT before Exceptional Item grew by 24% to Rs. 20.28 crore, a margin of 5%. In H1FY 2016, PBT before Exceptional Item grew by 27.3% to Rs. 36.36 crore, a margin of 4.6%.Q2FY 2016 PAT grew marginally to Rs. 10.65 crore and 13.8% to Rs. 21.14 crore for H1FY 2016
The Company gross revenue grew 8% YoY to Rs 419.48 crore in Q2FY16. The revenue mix was Rs 147.54 crore from own manufacturing, Rs 170.73 crore from JVs, and Rs 101.21 crore from outsourcings. For H1FY 2016, gross revenue grew 13% YoY to Rs 827.48 crore, with revenue mix was Rs 294.81 crore from own manufacturing, Rs 337.66 crore from JVs, and Rs 195.01 crore from outsourcings.
Sales mix in Q2FY 2016 was Own manufacturing (35%), JV (41%) and Others (24%) while for H1FY 2016 sales mix was Own manufacturing (36%), JV (41%) and Others (23%)
As on September 30, 2015, the Company total debt stood at Rs 199.60 crore as against Rs 187.76 crore at end of March 2015. Working capital days increased to 43 days for H1FY 2016 from 39 days in FY 2015. Also, leverage ratio stood at 0.73 in H1FY 2016 as against 0.74 in FY 2015.
Operational Performance - The Company tiles business sales volumegrew 5.7% YoY to10.78million square meters (msm) in Q2FY 2016, while it rose 9.7% to 21.49 msm in H1FY 2016. For Q2FY 2016, sales volume mix was 4.6 msm from own manufacturing, 3.88 msm from JVs and 2.30 msm from others. For H1Fy 2016, sales volume mix was 9.13 msm from own manufacturing, 7.82 msm from JVs and 4.54 msm from others.
Capacity Expansion- 1) The Company plans to increase capacity to ~60 msm p.a. by end of Q1FY 2017 from current capacity of ~56 msm p.a.2) Somany Fine Vitrified Private, a subsidiary company expected to commence production of 4.3 msm p.a. of polished vitrified tiles in October 2015. 3)The Company brown field expansion at Kassar plant, Haryana, to produce 4 msm of glazed vitrified tiles is expected to be commissioned in Q1FY17.The Company remainsoptimistic about its future growth prospects in general and building and construction material industry in particular especially in the backdrop of various initiatives being taken by the incumbent government which would fructify in near future.The company remains confident over demand growth for H2FY 2016 on hopes that (i) Pay commission and One Rank One Pension (OROP) are likely to boost demand, (ii) CSR activities of Corporate India will pick up further steam than in the previous year helping overall industry growth, (iii) Exports continue to offer growth opportunities, and (iv) The recent cut in mortgage rates is likely to spur demand for Real Estate benefiting Buildings Material industry immensely.The Company guides tiles industry would benefit in coming quarter after initiation of anti-dumping duty on vitrified tiles by the Ministry of Commerce. Also, Government machinery is moving at a healthy clipping and will improve sentiments and demand prospects for the Buildings Material Industry.
The Company guidesGovernment plans for smart cities, dedicated freight corridor, Swachh Bharat Abhiyan, and housing for all will also bode well for Buildings Material Industry.80 Lakh Toilets built under the Swachh Bharat Abhiyan. Huge sums allocated by Corporate India under CSR. Framework laid for Smart Cities & Make in India programs; to lead to enormous investments and improve the quality of living in India. Relative Strength in Economy has allowed for cut in Interest rates leading to lower Home loan rates in nearly 4 years.
The company guides capex of Rs 100 crore for next 2-years. Of the total capex, the company guides a routine capex of Rs 30 crore and Rs 70 crore for brownfield expansion for FY16 and FY17.The Company trims topline growth of around 15-16% for FY 2016 from earlier guidance of 18-19%.The Company plans to take price hike between second half of December 2015 – January 2016.


(Vishnu Ch) #18

I found the below insightful document which should give an idea about the average ticket size of sales from various dealers.

Somany Ceramics Franchisee Manual 2014-15

Investment: RS. 1450 PER SQFT (CARPET AREA)
(For all types of dealerships)

Pasting the brief summary i managed to capture from the above linked doc.

Disc: Invested since Dec 2012. No trading in the last 30 days.


(Sudhakar Moharana) #19

NahiPhislenge is an initiative by Somany Slip Shield, India’s First Anti-Skid Tiles which urges us not to slip anymore.

Disclosure : Invested


(Amit) #20

20 Smart City announcement yesterday. http://www.moneycontrol.com/news/real-estate/govt-announces-first-20-smart-cities_5194361.html#anchore_top_strip

50,000 Cr investment plan for 5 Years on 20 Smart City

Bullish on Infra stocks going forward. Current valuation of 29 pe looks fine compare to Asian Paint, Cera, Kajaria or any similar domain company’s.

Dis : Invested bit