Buy Cera Sanitaryware; target of Rs 9899: Anand Rathi

About this update from Cera Sanitaryware Limited

Anand Rathi's research report on Cera SanitarywareCera Sanitaryware’s H1 remained soft as revenue was flat at Rs8.9bn. EBITDA declined 11.4% y/y, while PAT inched up 1.7% y/y to Rs1.2bn. Demand was subdued in H1, led by heatwaves in some regions, slowdown due to general elections in Q1 and prolonged rains in Q2. Input cost pressure hurt the gross margin, which fell 21bps y/y to 53.6%. Operating de-leverage hurt the EBITDA margin, which dipped 190bps y/y to 14.6%.OutlookWe expect 10%/13%/10% revenue/EBITDA/PAT CAGRs during FY24-27. Though the growth rate seems lower, the lean balance sheet with Rs7.9bn net cash surplus in FY24 (surplus of Rs11.9bn likely by FY27, despite capex of Rs1.7bn) made us retain our Buy rating, with a 12-mth TP of Rs9,899, 40.6x FY27e earnings (earlier Rs8,740, 35x FY26e earnings).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 - 09122024 - anand

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