Somany Ceramics Limited (NSE:SOMANYCERA): Will The Growth Last?
In December 2018, Somany Ceramics Limited (NSE:SOMANYCERA) released its earnings update. Generally, the consensus outlook from analysts appear fairly confident, as a 40% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 8.6%. By 2020, we can expect Somany Ceramics’s bottom line to reach ₹986m, a jump from the current trailing-twelve-month of ₹704m. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Check out our latest analysis for Somany Ceramics
Can we expect Somany Ceramics to keep growing?
The longer term view from the 10 analysts covering SOMANYCERA is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 35% based on the most recent earnings level of ₹704m to the final forecast of ₹1.6b by 2022. This leads to an EPS of ₹25.68 in the final year of projections relative to the current EPS of ₹16.62. With a current profit margin of 4.1%, this movement will result in a margin of 6.6% by 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Somany Ceramics, I've put together three pertinent aspects you should further examine:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is Somany Ceramics worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Somany Ceramics is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Somany Ceramics? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
