Accumulate Cera Sanitaryware; target of Rs 8926: Prabhudas Lilladher

About this update from Cera Sanitaryware Limited

Prabhudas Lilladher's research report on Cera SanitarywareCera Sanitaryware (CRS) upward revised its revenue growth guidance between 19-21% from 17-19% and expects 16%+ margins in the near term, given strong demand outlook from replacement (accounts 65% its revenue) and expansion in geographical penetration. CRS’s Q2FY24 Revenue/PAT was 3.1%/3.0% above our estimates with healthy performance from faucetware segment & margin expansion of 60bps YoY. The company delivered revenue CAGR of 9.1% over 4years in Q2FY24 and strong growth guidance for H2FY24 considering seasonally better quarters. EBITDA margin improved to 16.5% and is expected to be at current level in near terms. We believe demand scenario to remain healthy and capacity expansion in faucetware division will add to growth in coming quarters. Hence, we expect positive momentum to continue. Management guided revenue of ~Rs29bn by Sept-25 with ~16%+ sustainability in EBITDA margin.OutlookWe estimate Revenue/EBITDA/PAT CAGR of 17.5%/18.2%/18.5% over FY23-26E. We upward revise our FY26E earnings estimate by 1.5% and maintain FY24/FY25E earnings. Maintain ‘Accumulate’ rating with revised TP of Rs8,926 (earlier Rs 8,857) valuing at 35x Sep’25 EPS.For all recommendations report, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Cera Sanitaryware - 01 - 10-2023 - prabhu

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