Buy Cera Sanitaryware; target of Rs 8956: Anand Rathi

Anand Rathi's research report on Cera Sanitaryware

Amidst the subdued demand environment, Cera Sanitaryware reported a stable performance. Revenue grew 5.4% y/y to Rs4.2bn, largely supported by faucets as sanitaryware revenue was flat. The productmix change led to a 2% y/y rise in gross profit to Rs2.2bn, while higher employee expenses dragged EBITDA down 5.1% y/y to Rs551m. PAT slipped 1.1% y/y to Rs466m. We introduce FY28e and expect 12%/14% revenue/earnings CAGRs over FY25-28. Considering the 11% fall in the stock price in the past one month, we believe the risk-reward to be favourable.

Outlook

Also, significant cash on the books provide assurance; hence, we upgrade our rating on the stock to a Buy with a 12-mth TP of Rs8,956, 35x the average of FY27e/FY28e EPS (earlier Rs8,034, 35x FY27 earnings).