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ICICI Securities Report
The faster than anticipated recovery in Somany Ceramics Ltd.’s volumes in June 2020 led to a beat in Q1 FY21 revenues at Rs 1.69 billion (our estimate Rs 1.4 billion), down 57% YoY.
Cost saving initiatives and lower fuel costs too led to a beat in Ebitda, which came in at down Rs 116 million (our estimate Rs 210 million).
The silver lining for the quarter was balance sheet discipline with stricter control on working capital (receivables declined to Rs 1.98 billion in Q1 FY21 versus Rs 2.7 billion in March 2020), which led to debt repayment of Rs 500 million-600 million during the quarter.
With sales recovery likely to accelerate, management expects Q2 FY21 sales at more 85% of Q2 FY20 levels, which would drive sharp improvement in Ebitda margins.
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