Buy Cera Sanitaryware; target of Rs 7578: ICICI Securities

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Cera Sanitaryware's revenue growth is expected to be driven by volume traction and price hikes, with a focus on the faucetware segment.
  • The company's operating margin is expected to improve due to price hikes and operating leverage, with a guided OPM of 13-14% for FY27.
  • Cera Sanitaryware has a strong brand presence and wide distribution reach, with a significant presence in tier-2 and tier-3 markets.
  • The company's capacity expansion plans, including the increase in faucetware capacity, are expected to support future growth.

Thesis Validation Checklist

  • Investors should watch for continued strong revenue growth and improvement in operating margins, driven by price hikes and operating leverage.
  • The company's ability to maintain its guided OPM range of 13-14% for FY27 will be a key indicator of its operational performance.
  • Any unexpected slowdown in the housing market or higher raw material prices could negatively impact the company's performance.
  • The company's working capital management, including its inventory and receivable days, will be an important factor to monitor.