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Motilal Oswal Report
Motilal Oswal believes Cera Sanitaryware Ltd. continued to witness healthy demand momentum in Q4 FY26 after clocking a healthy 11% revenue growth in 3Q, following a <5% growth since H2 FY24.
In the recent interaction with the company, the brokerage noted that the management remained optimistic about reporting double-digit growth in FY27, with a gradual expansion in margins as one-off cost factors disappear in the coming period.
Further, the company's production remains unaffected, supported by sufficient gas supply from Gail (100%) and Sabarmati (80%).
The brokerage keeps its earnings estimate intact and expect an 11%/23%/20% CAGR in revenue/Ebitda/PAT over FY26E-28, with Ebitda margin recovering toward 16%.
A high cash surplus (Rs 1,000 crore likely in FY28) will help Cera to weather the storm in case of tough times. After a 15% correction in scrip from its Feb'26 high, Cera's scrip appears attractive at 19 times FY28E P/E (vs 33x 10-year average).
Motilal Oswal thus, upgrades its rating on Cera to Buy with a revised target price of Rs 5,990, based on 25x FY28E P/E.
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