Motilal Oswal's research report on Cera Sanitaryware
Cera Sanitaryware (CRS) continued to witness healthy demand momentum in 4QFY26 after clocking a healthy 11% revenue growth in 3Q, following a <5% growth since 2HFY24. In our recent interaction, management remained optimistic about reporting double-digit growth in FY27, with a gradual expansion in margins as one-off cost factors disappear in the coming period. Further, the company’s production remains unaffected, supported by sufficient gas supply from Gail (100%) and Sabarmati (80%). We keep our earnings estimate intact and expect an 11%/23%/20% CAGR in revenue/EBITDA/PAT over FY26E-28, with EBITDA margin recovering toward 16%.
Outlook
A high cash surplus (~INR10b likely in FY28) will help CRS to weather the storm in case of tough times. After a ~15% correction in scrip from its Feb’26 high, CRS’s scrip appears attractive at ~19x FY28E P/E (vs. 33x 10-year average). We, thus, upgrade our rating on CRS to BUY with a revised TP of INR5,990, based on 25x FY28E P/E.
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Cera Sanitaryware - 0304026 - moti