Buy This Stock At Target Price Rs. 5545 For 26% Returns: ICICI Securities

Reputed brokerage firm ICICI Securities recommended investors buying the stocks of Cera Sanitaryware for a 26.45% return. The company wants to double its revenues over the next 4 years and plans to undertake capex in its sanitaryware and faucetware businesses, which shall take care of future growth.

Target Price

The Current Market Price (CMP) of Cera Sanitaryware is Rs. 4385. ICICI Securities has estimated a Target Price for the stock at Rs. 5545. The stock is expected to offer a 26.45% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 4385
Target Price	Rs. 5545
1 year return	26.45%

Company performance

The company's revenue in FY 21 was recorded at Rs. 12,234 mn, which is expected to be at Rs. 14,779 mn. Their EBITDA in FY 21 was recorded at Rs. 1,572 mn, which is expected to be at Rs. 2,216 mn. The company's Net Income in FY 21 was recorded at Rs. 874 mn, which is expected to be at Rs. 1,509 mn. However, there has been a moderation in FY22 due to significant price erosion in the US base portfolio (81% of exports). Management stated demand outlook remains robust and continues to be hopeful of doubling the turnover over the next four years with sustained operating margins of ~14-15%.

Comments by ICICI Securities

ICICI Securities stated We reiterate BUY on Cera Sanitaryware (CRS) post our recent interaction with its management and continue to believe the company will be a significant beneficiary of the pick-up in demand from housing segment seen post pandemic. CRS continues to focus on its two major product categories, viz. sanitaryware and faucetware, and has indicated expansion plans in both these segments to be finalised over the next 1-2 quarters. We expect CRS to report revenue / EBIDTA CAGRs of 18% / 25% respectively over FY21-FY24E aided by growth in the high-margin sanitaryware and faucet segments, continued net-debt-free balance sheet and healthy return ratios."

About the company

CRS is one of the major organized sanitaryware players in India. Over the years, the company has expanded its product portfolio from sanitaryware to tiles, faucets and wellness goods, becoming a one-stop bathroom solution provider. It has a significant presence in tier-2 and tier-3 markets with a strong brand name and wide distribution. CRS management believes sanitaryware and faucetware will together continue to constitute ~85% of total revenues and tile business ~15% going ahead too.

Disclaimer

The above stock was picked from the brokerage report of ICICI Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.