Cera Sanitaryware Ltd. share price target

Key takeaways from our meeting with the management of Cera Sanitaryware (CRS): (1) blended revenue growth of 12-13% going ahead with sanitaryware growing at 10-12%, tiles at ~10%, and faucets at 15-17% led by wider distribution; (2) blended operating margins sustainable at ~15% backed by sanitaryware at ~20%, with tile/faucet margins guided at ~10%/12-14%. We prune PAT estimates on below-expected tile growth guidance and revise our...

Festive Season Demand Holds Key for Q3FY17E: Cera Sanitaryware delivered healthy Q2FY17 earnings compared to its Q2FY16 YoYbasis. The sales turnover has increased from Rs.1996Mn in Q2FY16 to Rs.2610Mn in Q2FY17 representing 30.8% YoY growth. The variable cost which includes powerand fuel cost gone down almost 46% in Q2FY17 versus Q2FY16, which led to a 10.0% savings in the operational expenses that led to the improvement of the EBITDA by 49.5% on YoY basis in Q2FY17.

Capacity expansion in faucetware to drive revenue growth; and sanitarywarebusiness to showcase steady performance: In the last four years, Cera hasgrown at a CAGR of ~ 36%, higher than the industry growth of ~ 15% and in the next two years it is expected to grow at a CAGR 28%. Over the last couple of years, the company has gained its market share in the sanitaryware, and is the third largest player with a market share of ~ 23%.

Cera Sanitary ware Ltd (CSL), incorporated in 1980 by Mr Vikram Somany is the third largest sanitary company in organized sector with market share of 22%. Company is mainly engaged into manufacturing sanitary ware and faucet ware...