CERA SAN­I­TARY­WARE

Flash News Investment - - RECOMMENDATIONS -

{Ticker : 532443

{ BUY: ₹3395

{ Tar­get: ₹4020

Cera San­i­tary­ware is a lead­ing san­i­tary­ware player in In­dia and en­joys 23 per cent mar­ket share. Cera de­rives 62 per cent rev­enue from san­i­tary wares, fol­lowed by faucets (21 per cent) and tiles (17 per cent). It has been fo­cus­ing on faucets and tiles seg­ment. We ex­pect tie-up with Ital­ian lux­ury brand ISEVA for faucets and ex­pect the spurt in re­place­ment de­mand is go­ing to ben­e­fit the com­pany. Ad­di­tion­ally, GST is ex­pected to re­duce ef­fec­tive tax rate by 5-10% which is im­mensely pos­i­tive for the com­pany. It has re­ported ro­bust rev­enue growth of 41 per cent YoY on a stand­alone ba­sis, while EBITDA in­creased 7 per cent YoY. We see that due spike in op­er­at­ing ex­penses, its net profit grew lower by 4 per cent YoY. We ex­pect ex­penses to smoothen go­ing for­ward, lead­ing to growth in net profit. Hence, we rec­om­mend in­vestors to BUY the scrip.

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