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ICICI Securities Report
Cera Sanitaryware Ltd. has reported Q4 FY24 consolidated revenue growth of 2.5% YoY (+25% QoQ; three-year compound annual growth rate of 7.8%) with sanitaryware revenue declining 2% YoY, faucetware growing 10% YoY, while tiles revenue declined 10% YoY.
Operating profit margin increased 41 bps YoY (+330 bps QoQ) driven by lower advertising and promotion expenses and other cost optimisation measures (other expenses declining 357 bps YoY) resulting in Ebitda/adjusted profit after tax growth of 5.0%/12.6% YoY, respectively.
Management stated demand is likely to revive post Q1 FY25 and has revised revenue guidance of ~Rs 29 billion to March 2027 (from Sep'25 earlier).
It expects FY25 to be stronger driven by uptick in real estate demand and retail segment. We like Cera led by its significant presence in sanitaryware and faucetware segments, demand for which is set to rise led by an improving housing market.
We broadly maintain our PAT estimates and upgrade the stock to Add from Hold with an unchanged Mar'25E target price of Rs 7,827, set at 32 times Mar'26E price/earnings.
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