"Cera Sanitaryware (CSL) reported a strong set of numbers for 2QFY2013. Its top-line soared by 23.1% sequentially to Rs111cr and was 18.5% higher than our expectations of Rs94cr. The company's EBITDA came in at Rs18.4cr, 18.1% higher sequentially, attributable mainly to the growth in top-line. The EBITDA margin came in at 16.5%, in-line with our estimate, but was sequentially lower by 70bp. The net profit rose by 19.7% sequentially to Rs11cr from Rs9.2cr in the prior period."
"CSL has already expanded its capacity of sanitaryware unit from 2.0mn pieces per annum (p.a.) to 2.7mn pieces p.a. and is planning to expand further to 3mn pieces p.a. by January 2013. The expansion will enable CSL to en-cash the opportunity from the growing demand. The growth in demand is on the back of a) changing lifestyle of people, b) increasing awareness for improving sanitation coverage and c) revival in construction activities. Moreover, continuous marketing activities which have created high visibility for the brand (marketing cost has grown at 36% CAGR over FY2008-12), are expected to continue supporting revenue growth going forward."
"We expect CSL's constant development on the marketing front coupled with capacity expansion to help post a revenue growth of 28.6% CAGR over FY2012-14E to Rs528cr. The EBITDA and net profit are expected to grow at a CAGR of 20.1% and 16.4% to Rs77cr and Rs43cr respectively in FY2014E. At the current market price of Rs361, CSL is trading at a PE of 10.9x and EV/Sales of 1.0x on FY2014E. We recommend Accumulate on the stock with a target price of Rs411, based on a target PE of 12x and implied EV/Sales of 1.1x for FY2014E," says Angel Broking research report.
Public holding more than 90% in Indian cos
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