We are maintaining our ‘BUY’ rating given the recent significant correction in stock price. Cera Sanitaryware (CRS) has reported decent results in the challenging weak demand scenario. However, CRS has taken price hike of 6%/1% in faucet/sanitaryware during FY25. The B2B segment showed improved momentum in the quarter, partially offsetting the slower demand in the retail space for CRS. CRS reported 5.8% growth in revenue with 130bps expansion in EBITDA margin in Q4FY25 due to cost management and operational leverage. CRS is expected to outperform the industry by 6-7%, with EBITDA margin of 15-16% by the end of FY26. The company continues to hold off on its sanitaryware expansion plans until there is an improvement in the demand environment.
OutlookWe estimate revenue/ EBITDA/PAT CAGR of 13.8%/13.9%/12.6% over FY25-27E. We downward revise FY26/FY27E earnings estimate by 2.4%/1.8% and reduce TP to Rs 7,319 (Rs7,456 earlier), based on 30x FY27E earnings. Maintain ‘BUY’ rating.
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