Cera Sanitaryware - Growth impacted by GST: CRISIL

CRISIL has come out with its report on Cera Sanitaryware. The research firm has assigned a fair value of Rs 2862 per share. However, retained fundamental grade of 4/5 to the company.

October 10, 2017 / 18:20 IST

26 Aug, 2025 12:21

Volume

Todays L/H

CRISIL's research report on Cera Sanitaryware

Cera Sanitaryware Ltd’s (Cera’s) Q1FY18 results were below CRISIL Research’s estimates. Revenue grew 9.8% y-o-y to Rs. 2,346 mn owing to inventory destocking by dealers in June, prior to implementation of GST. EBITDA margin contracted 285 bps y-o-y to 14.1% owing to 506 bps y-o-y increase in material cost. Following a decline in EBITDA (down 8.6% y-o-y), adjusted PAT fell 9.8% y-o-y to Rs. 193 mn. Despite a subdued environment, Cera’s growth was better than peers’ - Kajaria (6% y-o-y growth), HSIL (1% y-o-y for building products) and Somany Ceramics (-18% y-o-y). For the remaining year, demand is expected to improve as the company and dealers start adjusting to GST system. Although the building products industry is going through a lean phase, we remain positive on its long-term prospects. We expect Cera to benefit from the revival based on 1) diversification from a traditional sanitaryware player to a complete bathroom solutions provider, 2) strong market positioning, 3) focus on new product launches and 4) wide geographic reach. We maintain our fundamental grade of 4/5.

We have lowered our earnings estimates for FY18-19. However, we remain positive on the long-term prospects of the company and maintain our earnings estimates beyond the explicit projection period. Consequently, we maintain the discounted cash flow (DCF)-based fair value at Rs. 2,862 per share. At the current market price of Rs. 3,177 per share, our valuation grade is 3/5.

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report. The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.