Cera Sanitaryware zooms 8% as company logs highest-ever sales revenue in Q4

The management said it focused on driving an improved product mix with new products comprising products to aid revenue growth

Shares of Cera Sanitaryware leaped 7.7 per cent, and claiming a fresh 52-week high of Rs 7,339.30, on the BSE in Friday's intra-day trade after the company reported best-ever revenue in the March quarter of FY23.

For the January-March period, Cera's revenue from operations stood at Rs 530.4 crore, up 21 per cent over revenue of Rs 438.7 crore reported in Q4FY22. Its profit after tax, too, surged around 21 per cent year-on-year to Rs 62.9 crore in Q4FY23.

The Ebitda, however, increased just 3.3 per cent to Rs 85.1 crore from Rs 82.4 crore YoY.

"For FY23, the topline was Rs 1,796 crore, an increase of 24.6 per cent over FY22’s topline of Rs 1,442 crore. Ebitda for FY23 was Rs 323 cror, up 32 per cent YoY, while profit after tax was Rs 210 crore, up 41 per cent on year. Our sanitaryware and faucetware divisions, which made up 53 per cent and 35 per cent of our Q4FY23 revenue respectively, registered 18 per cent and 29 per cent revenue growth respectively, on a YoY basis," said  Vikram Somany, Chairman & Managing Director, Cera Sanitaryware. 

The management said it focused on driving an improved product mix with new products comprising products, launched over the last 3 years, in Q4FY23. This helped in increasing their share to 34 per cent of the turnover in the said quarter. Efforts to improve productivity at ther plants, combined with cost optimization measures have elevated our Ebitda margin in a sustainable manner.

For the financial year 2022-23, the Board has recommended a dividend of Rs 50 per share, which equates to 1,000 per cent of face value. This is higher than the combined dividend of R. 35 per share, equating to 700 per cent of face value distributed in FY22.

"Cera has been growing at a faster pace than the industry achieving 3x of the industry growth rate in FY23. This is led by three key factors – better product availability compared to peers due to less dependency on China (3 per cent of total sales in Q4), higher contribution (34 per cent in 4Q) from new products compared to industry average of 10 per cent, and Cera's recently launched Retail Loyalty Program," noted analysts at Centrum Broking.

Given the robust demand, management maintains its guidance of doubling the sales over FY22‐H1FY26. Sanitaryware and Faucetware segments have grown at 26 per cent and 29 per cent, respectively in FY23 over FY22. These segments registered a growth of 19 per cent and 30 per cent YoY, respectively in Q4FY23. Similar growth momentum is expected going forward with CAGR sales growth expectation of 16 per cent over FY23‐25E.

Analysts at Centrum expect Cera’s sales/Ebitda/net profit to grow at CAGR of 16/18/19 per cent, respectively over FY23‐25E and Ebitda margins to expand from 16.2 per cent in FY23 to 16.9 per cent in FY25. 

"Healthy momentum in real estate cycle and strong replacement demand should drive the growth momentum for Cera. We revise our estimates upwards and maintain Buy rating on the stock with new target price of Rs 8,426 valuing at 35x FY25E EPS," it said.