Shares of Cera Sanitaryware have delivered over 1,300 return in the last 10 years. Notably, the multibagger stock has recovered over 77 per cent from its 52-week low of Rs 3,518.60, hit on May 10, 2022. It hit a 52-week high of Rs 6,789.05 on February 22, 2023.
ICICI Securities continue to like this sanitaryware, faucet ware, and wellness company due to its net cash balance sheet, wide distribution, strong brand and comprehensive product portfolio which would position it to deliver high growth led by the ongoing uptick in the housing market.
It believes that the demand scenario remains healthy for core categories of sanitaryware and faucet ware with both being driven by residential housing and home improvement markets primarily from tier 2 and below cities.
Also, the company indicated it is on track to achieve its guidance of doubling revenues in 40 months (starting FY22). It has taken no price hikes across segments in Q4FY23 and does not foresee any adverse pressure on margins as raw material cost remains benign QoQ.
“Brownfield expansion of faucet ware facility is on track to commence production from Q2FY24 and will be a major growth driver for the company going ahead,” the brokerage firm added.
ICICI Securities has maintained an ‘Add’ rating on this small-cap stock with a target price of Rs 6,746 per share, suggesting a potential upside of 8 per cent from Tuesday’s closing price of Rs 6226.75.
Commenting on its Q3 performance, Vikram Somany, Chairman & Managing Director, said,
“We are pleased to report continued momentum in our performance in Q3 FY23 with revenues
higher by 18% and PAT higher by 33% on a y-o-y basis. Our sanitaryware and faucet ware
divisions, which made up 54% and 33% of our Q3FY23 revenue respectively, registered a 19%
and 12% year-over-year increase.”
“The trend of premiumization across our new-age and high-margin products remains strong, and
customers are clearly demonstrating a preference for items with improved features, sleek
design, and a growing technological presence. Our new Lustre Series products, which include
Rose Gold, French Gold, and Platinum sanitaryware and faucet ware options, have been well received by customers. The response to our recent ad campaign, featuring new brand
ambassadors and our increased investment in advertising and publicity, has been
overwhelmingly positive,” Somany added.