Accumulate Cera Sanitaryware; target of Rs 8486: Prabhudas Lilladher

Prabhudas Lilladher's research report on Cera Sanitaryware

We downward revise our FY24/FY25/FY26E earnings estimate by 10.5%/7.4%/4.5% and maintain ‘Accumulate’ rating, as we value the stock at 35x Dec’25 EPS to arrive at revised TP of Rs8,486 (earlier Rs 8,597). Cera Sanitaryware (CRS) reported below estimates results on all fronts with demand slowdown and business disruption in certain parts of India e.g Kerala increased local tax on houses (accounts ~10% CRS sales) & Delhi banned construction activity for 40-45days (earlier 15-20days) impacting sales and margins (due to increase in adv./promotion expenses, which expected to normalize in coming year). However, CRS maintained its revenue guidance of Rs25bn/Rs29bn by Mar-25/Sep-25 with ~16%+ sustainability in EBITDA margin.

Outlook

We believe demand scenario will continue to remain subdued in the near term and revive by Q1FY25 with recent capacity expansion in faucetware division. Accordingly, we expect positive momentum to continue but with a lag. We estimate Revenue/ EBITDA /PAT CAGR of 14.3%/14.9%/15.3% over FY23-26E. Maintain ‘Accumulate’ rating.

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Cera Sanitaryware - 14022024 - prabhu