Buy Cera Sanitaryware; target of Rs 7178: Prabhudas Lilladher

Prabhudas Lilladher's research report on Cera Sanitaryware

We are maintaining our ‘BUY’ rating. Cera Sanitaryware (CRS) has reported modest results in the challenging weak demand scenario. The B2B segment showed improved momentum in the quarter, partially offsetting the slower demand in the retail space for CRS. CRS reported flat growth in revenue with ~40bps contraction in EBITDA margin in Q2FY26 due to increase in input cost. CRS has guided for 7-8% growth in revenue, with EBITDA margin of 14.5-15% by the end of FY26. Senator and Polipluz brand start contributing to the revenue from H2FY26 onwards, CRS expects Rs400-450mn from both these brands in H2FY26 and Rs 1.5bn in next two years. CRS has divested its stake in its subsidiaries, from Q2FY26, the company will report its financials on a standalone basis.

Outlook

We estimate revenue/EBITDA/PAT CAGR of 10.9%/12.2%/10.2% over FY25-28E. We downward revise FY27/FY28E earnings estimate by 3.2%/2.6% and maintained TP to Rs7,178, based on 30x Sep’27E earnings. Maintain ‘BUY’ rating.