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ICICI Securities Report
Cera Sanitaryware Ltd. is one of the major organised sanitaryware players in India. Over the years, the company has expanded its product portfolio from sanitaryware to tiles, faucets and wellness goods, becoming a one-stop bathroom solution provider.
It has significant presence in tier-II and tier-III markets with strong brand name and wide distribution. Cera is likely to witness Ebitda/adjusted profit after tax compound annual growth rate of 15.7%/22.3%, respectively, during FY23-FY26E with continued strong balance sheet and healthy return ratios (return on equity of 20.7% in FY26E).
We maintain 'Hold' rating on the stock with an unchanged December 2024E target price of Rs 8,262, set at 32 times Dec-25E price/earning, in line with the historical five-year average, one-year forward price/earning.
Key downside risks
Any unexpected slowdown in housing market would adversely affect business.
Higher raw material prices may adversely affect profitability and demand.
Key upside risks
Sharp decline in raw material prices could result in better-than-expected profitability.
Better-than-expected pickup in demand scenario.
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