Cera Sanitaryware soars 8%, hits new high in weak market on healthy outlook

Shares of Cera Sanitaryware hit a 52-week high of Rs 6,397.65 as they rallied 8 per cent on the BSE in Monday’s intra-day trade in an otherwise weak market on healthy outlook. The stock surpassed its previous high of Rs 6,224.95, touched on February 14, 2023. In comparison, the S&P BSE Sensex was down 0.59 per cent at 60,641 at 02:46 PM.

In past one month, the market price of Cera has outperformed the market by surging 20 per cent, as against an unmoved S&P BSE Sensex.

For October-December quarter (Q3FY23), Cera reported better-than-expected earnings with the company’s standalone profit after tax (PAT) up 33 per cent year-on-year (YoY) at Rs 56.37 crore, on strong operational performance. Revenue from operations grew 18 per cent YoY to Rs 455.80 crore. EBITDA (earnings before interest, taxes, depreciation, and amortization) margin improved 170 bps to 18.4 per cent from 16.7 per cent in a year ago quarter. The healthy growth in PAT and revenue driven by a healthy demand environment which was aided by sustained interest from customers to improve and upgrade their homes.

The management said during the quarter gone by, the company continued to witness strong demand for products, as the overall replacement demand remained quite positive with consumers continuing to spend on home upgradation and improvement. The velocity of sales for newly built homes and for existing residential apartments continues to be very strong, the management said.

Management stated that demand conditions remain healthy supported by pick-up in the home improvement market and continued momentum in new home sales. Company has maintained its guidance for doubling of revenues in ~3.5 years (from FY22) and improving margins by 50-75bps every year. Analysts at ICICI Securities said they continue to like Cera due to its significant presence in sanitaryware and faucetware, demand for which continues to rise on the back of an improving housing market.

“Cera has a strong net-cash balance sheet with healthy growth prospects led by uptick in the housing and home improvement markets. We continue to like Cera for its comprehensive product portfolio, wide distribution and strong brand presence,” the brokerage firm said in its result update.

Cera has made progress in expanding the production capabilities of their faucetware division and is expected to be completed well on schedule. Analysts at Bonanza Research said they remain positive on the company’s growth potential on the back of strong trend of premiumization across newage and high-margin products, focus on sanitaryware and faucetware segments aiding robust growth in performance, innovations in product portfolio (new Lustre Series products well received), and strong financial standing enabling sustained growth and expansion.