Somany Ceramics Expects Growth in H2 FY25 with Improved Demand and Capacity Utilisation

Somany Ceramics anticipates a stronger second half of FY25, with growth expected in the range of high single to low double digits. This projection is based on improved capacity utilisation across its facilities and stabilising demand. Managing Director and CEO, Abhishek Somany, forecasts growth to be around 10%, with full-year growth for FY25 expected at 5-6%.

Somany’s growth outlook is shaped by stabilising demand, particularly in non-metro cities, despite subdued conditions in recent months. Lower export volumes from Morbi-based manufacturers have resulted in material oversupply within the domestic market. Additionally, high rainfall during the quarter has impacted demand further. However, the company sees no significant disruptions in the second half of the year.

Retail sales contribute 75% of Somany’s revenue, while the rest comes from project business, split equally between government and private sector contributions. The company expects its capacity utilisation to improve to 80%, up from 77% in the first half of FY25, with hopes to reach over 90% in a more favourable year.

Over the past 24 months, Somany has invested ₹500 crore into greenfield and brownfield expansion projects, resulting in a 25% increase in its capacities. However, there are no new capital expenditure plans until market conditions improve. Despite a 38% decline in net profit for Q2 FY25, the company remains optimistic about a recovery in the second half of the fiscal year.

Somany’s Q2 FY25 saw a drop in net profit to ₹17 crore from ₹30 crore in the same period last year. The company’s EBITDA margin also shrank by 130 basis points YoY to 8.5%, from 9.8%. However, a 2.6% year-on-year increase in sales volume suggests that the company is poised for recovery, with the product mix of its own manufacturing, joint ventures, and others at 28%, 39%, and 33%, respectively.

Looking ahead, Somany plans to launch new products, which is expected to drive demand for its premium offerings. This is expected to improve capacity utilisation and contribute to a 1% improvement in margins for FY25 compared to the previous year.