Hold Cera Sanitaryware; target of Rs 8178: Prabhudas Lilladher

About this update from Cera Sanitaryware Limited

Prabhudas Lilladher's research report on Cera SanitarywareCera Sanitaryware (CRS) reported above estimates profitability with improvement in operating margins on account of cost saving initiatives, reduction in advisement expense (2.8% cons. rev.) and increase in other income. However, CRS reported soft revenue growth of 3.1% YoY in Q4FY24 and guided for sluggish demand to continue in Q1FY25 due to general election and shortage of labours because of heatwave in the country. Company has changed its revenue guidance to reach Rs29bn by Mar-27 inplace of Sep-25 with ~16% revenue CAGR over FY24-27, while EBITDA margin expected to maintain at 16%+. We believe demand scenario will continue to remain subdued in the near term and revive by H2FY25 with expected improvement in demand environment emanating from rub-off of healthy growth in real estate sector. Accordingly, we expect positive momentum to continue but with a lag. We estimate Revenue/ EBITDA /PAT CAGR of 13.4%/14.1%/14.4% over FY24-26E.OutlookWe downward revise our FY25/FY26E earnings estimate by 3.3%/5.2% and maintain ‘Accumulate’ rating, as we value the stock at 34x FY26 EPS to arrive at revised TP of Rs 8,178 (earlier Rs 8,486).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 - 15052024 - prabhu

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