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20140213 Cera Sanitaryware Ltd IER FirstCut INE739E01017.pdf


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Cera Sanitaryware Ltd
Q3FY14 results first cut: Profitability under pressure
4/5 (Superior fundamentals)

Valuation Grade

2/5 (CMP has downside)

Industry

Sanitary ware

February 13, 2014
Fair Value
CMP

The above grades are outstanding ones and are currently under review
Cera Sanitaryware Ltd’s (Cera’s) Q3FY14 revenues were in line while profitability was below
CRISIL Research’s expectation. Highlights of the results are mentioned below; this will be
followed by a detailed quarterly update. Our outstanding fundamental grade is 4/5 and the fair
value is ₹615 per share. We may revise our assessment post our discussion with the
management.

Excellent
Fundamentals

Q3FY14 result analysis


5

Consolidated revenues grew 25.1% y-o-y to ₹1,601 mn compared to ₹1,280 mn in

4
3
2
1

Q3FY13.


₹615
₹751

CFV MATRIX

Fundamental Grade

Fundamental Grade

RESEARCH

Poor
Fundamentals

EBITDA margin contracted by 318 bps y-o-y to 12.9% from 16.0% during the same

1

2

3

4

5

quarter last year as material, employee, and power and fuel costs increased y-o-y as a
Valuation Grade

Subsequently, adjusted PAT declined by 10.4% y-o-y to ₹108 mn during the quarter
against ₹120 mn in Q3FY13.

Valuations: The current market price has downside
Our discounted cash flow (DCF)-based outstanding fair value estimate is ₹615 per share. At
the current market price of ₹751, the valuation grade is 2/5.

KEY FORECAST

KEY STOCK STATISTICS
NIFTY/SENSEX
NSE/BSE ticker
Face value (₹ per share)
Shares outstanding (mn)
Market cap (₹ mn)/(US$ mn)
Enterprise value (₹ mn)/(US$ mn)
52-week range (₹)/(H/L)
Beta
Free float (%)
Avg daily volumes (30-days)
Avg daily value (30-days) (₹ mn)

(₹ mn)

FY11

FY12

FY13

FY14E

FY15E

Operating income

2,440

3,209

4,893

6,463

7,900

EBITDA

489

561

793

935

1,213

Adj net income

252

308

434

526

670

20

24

34

42

53

(36)

22

41

21

27

0.3

0.4

0.5

0.6

0.8

RoCE (%)

32.0

28.8

32.7

29.8

32.0

RoE (%)

25.2

24.5

27.3

26.0

26.2

90%

PE (x)

37.7

30.9

21.9

18.1

14.2

80%

Adj EPS (₹)
EPS growth (%)
Dividend yield (%)

P/BV (x)
EV/EBITDA (x)

Strong
Upside



Strong
Downside

percentage of sales.

6001/20193
CERA/CERAS
AN
5
12.7
9,499/153
9,670/155
783/398
0.6
44.2%
6,394
4.7

SHAREHOLDING PATTERN
100%

8.5

6.8

5.3

4.2

3.3

70%

19.3

17.2

12.3

10.3

8.0

50%

60%

CMP: Current market price

40%

Source: Company, CRISIL Research estimates

30%

33.1%

32.8%

31.7%

30.9%

0.1%
11.3%

0.1%
11.5%

0.1%
12.5%

0.1%
13.2%

55.5%

55.6%

55.8%

55.8%

Mar-13

Jun-13

20%
10%
0%

Promoter

FII

Sep-13

Dec-13

DII

Others

PERFORMANCE VIS-À-VIS MARKET
Returns
Cera
CNX 500

1-m

3-m

6-m

12-m

7%

37%

48%

88%

-2%

0%

11%

0%

ANALYTICAL CONTACT
Mohit Modi (Director)
Sayan Das Sharma
Bhaskar Bukrediwala

mohit.modi@crisil.com
sayan.sharma@crisil.com
bhaskar.bukrediwala@crisil.com

Client servicing desk
+91 22 3342 3561

clientservicing@crisil.com

For detailed initiating coverage report please visit: www.ier.co.in
CRISIL Independent Equity Research reports are also available on Bloomberg (CRI <go>) and Thomson Reuters.

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