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IDBI Capital
Cera Sanitaryware (Reduce)
Target: ₹3,973
CMP: ₹4,362.65
Cera Sanitaryware Ltd.’s (Cera) Q4-FY21 results were beat to estimates on key parameters. Despite lower production in sanitaryware unit, the company reported robust sales growth led by healthy demand traction.
Net sales increased by 47.2 per cent y-o-y to ₹438.40 crore while EBITDA came in at ₹70.1 crore, a robust growth of 65.7 per cent y-o-y. The company reported net profit of ₹47.70 crore, up by 33.7 per cent y-o-y.
The management reiterated positive outlook on strong demand in both retail and institutional segments.
Cera’s focus on improving product mix, reducing working capital cycle and strengthening distribution reach bodes well for future earnings growth. We have marginally increased our net sales/PAT estimates for FY22E/FY23.
Cera remains our preferred pick amongst our building material products coverage owing to its healthy market share in domestic sanitaryware and faucets industry, extensive reach, healthy balance sheet and pedigree of management. However, after a sharp run-up in the stock price, value looks priced in at current level.
We maintain reduce with a revised target price of ₹3,973 assigning 30x PER on FY23.
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