Hold Cera Sanitaryware; target of Rs 8637: ICICI Securities

ICICI Securities research report on Cera Sanitaryware

We recently interacted with management of Cera Sanitaryware (CRS). Takeaways: 1) Demand scenario in Q2-TD has seen some improvement QoQ but still remains sluggish. CRS expects stronger demand in H2FY25 as demand from projects has been healthy. It has maintained its guidance of single-digit YoY revenue growth for FY25. 2) Margins to remain ~16-17% in FY25 as the company has taken some price increases in Sep’24 which would negate RM increases. 3) Management has maintained its guidance of INR 29bn revenue (15.7% CAGR over FY24-27) with growth being driven by sanitaryware and faucetware segments. Maintain estimates and Jun’25E TP of INR 8,637, but upgrade the stock to HOLD from Reduce due to 16% stock price correction over the past 1 month.

Outlook

We believe CRS is well poised to benefit from the uptick in housing market due to its wide distribution, strong brand, comprehensive product portfolio and healthy balance sheet. Upgrade the stock to HOLD from Reduce due to 16% correction in stock price over the past 1 month with an unchanged Jun’25E TP of INR 8,637, set at an unchanged 35x Jun’26E PER.

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