Cera Sanitaryware Ltd. share price target

Cera Sanitaryware reported a muted performance, slightly missing our estimates. It registered a Revenue growth of 8% to ? 428.9 Cr led by healthy replacement demand, with Sanitaryware / Faucetware / Tiles divisions growing at 6% / 11% / 8% respectively. The EBITDA / PAT witnessed a robust growth by 38% / 42% respectively, with EBITDA / PAT margins expanding by 431bps / 318bps at 20% / 13.2% respectively owing to the easing prices of Raw materials.

In Q1FY24, Cera Sanitaryware (CRS) reported consolidated revenue growth of 8% YoY with sanitaryware/faucetware segments growing ~7%/8% YoY, while tiles revenue grew 11% YoY. Operating margin expanded 59bps YoY (flat QoQ) due to lower raw material cost (-133bps/-140bps YoY/QoQ), partly negated by higher employee expenses (+92bps YoY), resulting in EBIDTA/APAT growth of 12%/43% YoY, respectively.

CRS plans to continue operating in primarily three segments i.e sanitaryware, faucetware and tiles and has no plans to diversify into newer areas as of now. The focus of the company will mainly remain on sanitaryware and faucetware segments.

Cera delivered an impressive set of numbers for quarter ended Mar’23 with Revenue growth of 20.9% YoY led by robust growth in the Sanitaryware and Faucetware by 18% and 29% respectively. The EBITDA recorded a healthy growth by 29% at ? 114 Cr during Q4FY23 over ? 88.28 Cr in Q3FY23.

Cera Sanitaryware (CRS) has reported better than expected consolidated revenue growth of 20.9% YoY (4-year CAGR of 6.3%) to ~Rs5.3bn (+16.3% QoQ) on a low base with sanitaryware/faucetware revenue growing 18%/29% YoY, while tiles revenue grew 14% YoY in Q4FY23.

We recently interacted with the management of Cera Sanitaryware (CRS). Following are the key takeaways: 1) Demand scenario remains healthy for core categories of sanitaryware and faucetware with both being driven by residential housing and home improvement markets primarily from tier 2 and below cities.

Our interaction with dealers and industry participants indicates that demand trends for Cera Sanitaryware’s (CRS) core products (faucetware, sanitaryware) remain healthy in Q4FY23-TD. Demand continues to be driven by traction in the residential housing and home improvement markets.

Cera Sanitaryware (CRS) reported in-line standalone revenue growth of 17.8% YoY in Q3FY23 with sanitaryware / faucetware revenues growing 19% / 12% YoY, while tile revenues grew 34% YoY on a low base.