Buy Cera Sanitaryware; target of Rs 7678: ICICI Securities

ICICI Securities's research report on Cera Sanitaryware

Cera Sanitaryware (CRS) reported flat revenue YoY in Q2FY26 with faucetware segment decelerating 3.5% YoY (6 year CAGR of ~16%) on a high base, whereas sanitaryware segment growing 1.4% YoY. OPM fell 44bps YoY primarily due to gross margin falling 172bps YoY (-203bps QoQ) on adverse product mix and employee expenses increasing 58bps YoY, partly negated by lower other expenses (-185bps YoY), resulting in EBITDA decline of 3.5% YoY. Management stated retail segment demand remained muted but project segment was healthy in Q2 (39% of total revenue).

Outlook

Management expects H2FY26 to improve and now guides for 7-8% revenue growth and OPM of 14.5-15% for FY26. We cut PAT by 7.2-7.6% for FY26–27E. Maintain BUY with a rolled over Sept’26E revised TP of INR 7,678.