Cera Sanitary

This is India’s third largest sanitaryware company, based in Ahmedabad. The company posted a good performance for Q1FY15, with a 22% (YoY) rise in net profit at Rs.14 crore on a 28% rise in net sales at Rs.162 crore. The company has stated that overall rise demand led to this good performance.  Its overall expenses for the quarter rose 29%. A annualized earnings per share are at #8377;43 for the period under review as against #8377;35 EPS in the same quarter last year.

The company has now emerged has a complete bathroom solutions company, with a strong brand image and holds the third position, after HSIL and Parryware Roca. It enjoys a market share of around 24%. Sanitaryware accounts for 74% of its income, faucets and tiles bring in 15% and 7%,respectively, with rest coming from lifestyle business - bathtubs, jacuzzis, steam cubicles, shower partitions, shower panels and allied sanitaryware products.  Though the thing to remember is that one-third of its revenue is eaten away by imports and this means it is always exposed to currency ups and downs. Going ahead as its base and reach increases, maintaining the 30-35% CAR of past three years will be unsustainable and one should look at a more realistic growth of around 20% in topline and 12% in EBITDA margins.