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Systematix Report
Cera Sanitaryware Ltd.'s Q3 results belied our estimates. A 4%/18%/10% YoY dip in revenue/Ebitda/profit after tax was driven by Sanitaryware (revenue down 8% YoY, 52% mix); Faucets revenue grew 6% YoY, 37% mix.
Product mix stood at 43%/34%/23% for premium/mid/entry segments. Ebitda margin contracted 251basis points QoQ at 14% impacted by higher ad spend (Rs 220 million, 5% of revenue versus 3.8% in Q3 24; 9M at Rs 490 million, 3% of revenue). Strict WC management led to Rs 490 million CFO in Q3.
Demand moderation which started in November 2023 continues across key markets. CRS moderated production in Q3 (85% CU) due to above normal inventory and expects demand to improve from Mar'24 (seasonally strong month).
Despite soft demand, focus on launch of new products remained (74 in Q3, FY23 at 629 versus. 100 a year historically; ~35% revenue mix). From an asset light business model, CRS has turned focus on in-house manufacturing of value-added products.
Faucets capacity expanded by 1 lakh units to 4 lakhs (expandable to 6 lakh units when needed) at Rs 410 million capex having Rs 2.4 billion incremental revenue.
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