Accumulate Cera Sanitaryware; target of Rs 7456: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Cera Sanitaryware with a target price of Rs 7456 in its research report dated February 12, 2025.

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February 13, 2025 / 14:09 IST

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Cera Sanitaryware

We are upgrading our recommendation from ‘HOLD’ to ‘ACCUMULATE’ given the recent significant correction in stock price. Cera Sanitaryware (CRS) has reported weak results for the fifth consecutive quarter due to subdued demand. However, CRS has taken a price hike of 6%/1% in faucets/sanitaryware during 9MFY25, due to increase in the brass prices. The B2B segment showed improved momentum in Q3FY25, partially offsetting slower demand in the retail space for CRS. CRS reported 3.1% growth in revenue with 40bps contraction in EBITDA margin. The company said that it will focus on rationalizing its operating expenses in the coming quarters, driven by the reduction in logistics, labor, insurance and fuel costs. CRS is expected to revisit its revenue guidance – to reach Rs29bn by Mar’27 with EBITDA margin of 16-17% – by the end of FY25. The company continues to hold off on its sanitaryware expansion plans until there is an improvement in the demand environment. CRS maintained its market share in both the sanitaryware and faucets segments.

Outlook

We estimate revenue/ EBITDA/PAT CAGR of 10.0%/8.7%/10.0% over FY24-27E. We downward revise FY25/FY26E earnings estimate by 6.1%/2.8%/3.3% factoring in the margin contraction and subdued demand, and reduce TP to Rs7,456 (Rs7,712 earlier), based on 30x FY27E earnings. Upgrade to ‘ACCUMULATE’.

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