Reduce Cera Sanitaryware; target of Rs 8637: ICICI Securities

ICICI Securities research report on Cera Sanitaryware

In Q1FY25, Cera Sanitaryware’s (CRS) consolidated revenue fell 6.5% YoY with sanitaryware/faucetware segments’ revenue dipping ~9%/5% YoY, while that of tiles plunging 20% YoY. OPM shed 193bps YoY/281bps QoQ due to negative operating leverage, resulting in EBIDTA/APAT ebbing 17.5%/16.4% YoY. Management flagged tepid demand in Q1 (exacerbated by India’s general elections/adverse weather); but, it expects demand to reinvigorate in H2FY25 driven by a healthy real estate market. CRS maintains its revenue guidance of ~INR 29bn by Mar’27, but now expects growth to be back-ended with high single-digit FY25 revenue growth.

Outlook

While we prune our FY25E/FY26E PAT by 4%/3%, we downgrade CRS to REDUCE (from Add), taking cognizance of the stock price’s 6M ~31% rally. Rolling over to Jun’25E we arrive at a TP of INR 8,637 (earlier INR 7,827) set at 35x P/E Jun’26E (earlier 32x).

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