Cera Sanitaryware Posts Robust June Quarter Result, Recommend ‘Buy’
Ahmadabad-based Cera Sanitaryware has come with an improved performance in the June quarter of the current fiscal. It has reported a robust 41 per cent growth in sales to Rs 96 crore. The overall topline of the company saw a growth of 40 per cent to Rs 90.5 crore. The net profit has also jumped by 34 per cent to Rs 9.24 crore.
The EBITDA margins dropped by 149 basis points to 17.27 per cent, mainly due to the high cost of raw materials. Its other income was strong at Rs 2.5 crore compared to Rs 90 lakhs during the corresponding quarter last fiscal. The interest expenses rose by 72 per cent to Rs 1.2 crore. This however is at comfortable level since its interest cover ratio stands at 12x which means it can pay interest cost 11 more times from here on.
The effective tax rate remained close to 33 per cent, in line with the same in the corresponding quarter last fiscal. With its strong performance, its EPS is also up by 34 per cent to Rs 7.30. The EPS for the trailing four quarters now stands at Rs 29.21 which has shown growth of 34 per cent in line with the PAT growth for the June quarter.
Cera Sanitaryware is a manufacturer of sanitaryware, faucets, kitchen sinks, mirrors, etc. The sanitaryware sector is going through a growth curve and companies are also seen expanding their capacities to capitalize on this opportunity. The company mainly caters to the premium category of this market and hence has reflected a robust demand for its products. It also commands pricing power and hence we don’t expect any significant drop in its margins.
The stock has already touched a conservative target of Rs 285, forecasted by us in May. Looking at the current performance of the company, our advice to investors is to buy the stock with a price target of Rs 330. A full analysis of the company has been uploaded on our website. We have also recommended this stock to our subscribers in our Flash News Investment Weekly with a ‘buy’ call on it.
Particulars | Q1FY13 | Q1FY12 | Growth |
Gross Sales | 95.95 | 68.05 | 41% |
Total Income | 90.51 | 64.64 | 40% |
Cost Of Materials | 14.27 | 7.21 | 98% |
Purchases And Stock In Trade | 26.94 | 17.42 | 55% |
Employee Benefit Expenses | 13.27 | 9.30 | 43% |
Power And Fuel Expenses | 4.69 | 2.38 | 98% |
Other Expenses | 23.04 | 16.46 | 40% |
Total Expenses | 79.21 | 56.28 | 41% |
EBITDA | 15.63 | 12.13 | 29% |
EBITDA % | 17.27% | 18.76% | |
Depreciation | 2.17 | 1.88 | 15% |
Other Income | 1.58 | 0.94 | 68% |
PBIT | 15.04 | 11.18 | 35% |
Finance Cost | 1.24 | 0.72 | 72% |
PBT | 13.80 | 10.46 | 32% |
Taxes | 4.56 | 3.56 | 28% |
Net Profit | 9.24 | 6.90 | 34% |
EPS | 7.3 | 5.45 | 34% |