(1/22)
About:
Cera Sanitaryware Ltd. was incorporated in 1998. They manufacture, market, and distribute Sanitaryware, Faucetware & Tiles.
It is promoted by Vikram Somany
and has its manufacturing facility located at Kadi in Mehsana district of Gujarat.
About:
Cera Sanitaryware Ltd. was incorporated in 1998. They manufacture, market, and distribute Sanitaryware, Faucetware & Tiles.
It is promoted by Vikram Somany
and has its manufacturing facility located at Kadi in Mehsana district of Gujarat.
(2/22)
• High entry barrier sector:
Sanitaryware is a difficult market to enter as entrants are unable to keep up with the capacities and aren’t able to achieve the scale.
Furthermore, establishing relationships with dealers & consumers do not switch between brands easily.
• High entry barrier sector:
Sanitaryware is a difficult market to enter as entrants are unable to keep up with the capacities and aren’t able to achieve the scale.
Furthermore, establishing relationships with dealers & consumers do not switch between brands easily.
(3/22)
• RM price Developments:
Raw materials like China clay, Feldspar and Plaster of Paris have seen an increase in pricing of around 5% to 7%.
Prices of zinc and glaze have fallen by 6% and 9% respectively during Q3. In Q3, brass prices have seen a fall in prices by 1.4%.
• RM price Developments:
Raw materials like China clay, Feldspar and Plaster of Paris have seen an increase in pricing of around 5% to 7%.
Prices of zinc and glaze have fallen by 6% and 9% respectively during Q3. In Q3, brass prices have seen a fall in prices by 1.4%.
(4/22)
Company’s Strategy:
Cera Sanitaryware follows a strategy where they use a mix of outsourcing and in-house manufacturing. In the current quarter they outsourced 63% in sanitaryware and 51% in faucetware.
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Company’s Strategy:
Cera Sanitaryware follows a strategy where they use a mix of outsourcing and in-house manufacturing. In the current quarter they outsourced 63% in sanitaryware and 51% in faucetware.
continued>
(5/22)
They use this strategy so they can free up capacity to produce higher-end SKUs.
Low-end products which can be produced at a lower-cost by the vendors, are outsourced.
They use this strategy so they can free up capacity to produce higher-end SKUs.
Low-end products which can be produced at a lower-cost by the vendors, are outsourced.
(6/22)
• Business Segments:
Cera Sanitaryware has their presence in the following segments:
•Sanitaryware
•Faucetware
•Tiles
•Wellness
• Business Segments:
Cera Sanitaryware has their presence in the following segments:
•Sanitaryware
•Faucetware
•Tiles
•Wellness
(7/22)
• Q3 FY23 Numbers:
1. Revenue up from ₹414Cr in Q2 to ₹456Cr in Q3
2. OPM stayed stable at 16%
3. NPAT up from ₹51Cr to ₹56Cr
4. EPS up from ₹39 to ₹43.34
• Q3 FY23 Numbers:
1. Revenue up from ₹414Cr in Q2 to ₹456Cr in Q3
2. OPM stayed stable at 16%
3. NPAT up from ₹51Cr to ₹56Cr
4. EPS up from ₹39 to ₹43.34
(8/22)
Q3 FY23 Key Highlights:
• No price hikes were undertaken
• 40% of sales are from new products
• New topline target of ₹2,900Cr to achieve in next 40 months
• The retailer loyalty program which was launched in Q1FY23, has since had more than 13,500 retailers join.
Q3 FY23 Key Highlights:
• No price hikes were undertaken
• 40% of sales are from new products
• New topline target of ₹2,900Cr to achieve in next 40 months
• The retailer loyalty program which was launched in Q1FY23, has since had more than 13,500 retailers join.
(9/22)
• These give them insights about consumers’ demands, etc.
• Company will use internal accruals to fund two Capex programs
• Opening a Greenfield capacity in Gujarat; title documents expected to be executed in the next 6-9 months
• These give them insights about consumers’ demands, etc.
• Company will use internal accruals to fund two Capex programs
• Opening a Greenfield capacity in Gujarat; title documents expected to be executed in the next 6-9 months
(10/22)
Q3 Revenue Classification:
• Sanitaryware entry-level products were 27% of sales
• Mid products 15%
• Premium products 58%.
• In Faucetware, entry products were 28%
• Mid products 47%
• Premium products 25% of sales.
Q3 Revenue Classification:
• Sanitaryware entry-level products were 27% of sales
• Mid products 15%
• Premium products 58%.
• In Faucetware, entry products were 28%
• Mid products 47%
• Premium products 25% of sales.
(11/22)
• Key Strengths:
• Established presence of ‘CERA’ in the sanitaryware industry:
The company has 2nd largest market share in the sector (25%).
It also has has a pan-India distribution network consisting of around 15,566 dealers & sub-dealers for retail market.
• Key Strengths:
• Established presence of ‘CERA’ in the sanitaryware industry:
The company has 2nd largest market share in the sector (25%).
It also has has a pan-India distribution network consisting of around 15,566 dealers & sub-dealers for retail market.
(12/22)
• Geographical Mix:
Geographically, south India is the
largest contributor in CSL’s revenues, while Tier-3 areas (semi-urban and rural areas) contributed more than half of CSL’s revenue
in FY22
• Advertisement Policy:
CSI spends nearly 3-4% of its net sales in Ads.
• Geographical Mix:
Geographically, south India is the
largest contributor in CSL’s revenues, while Tier-3 areas (semi-urban and rural areas) contributed more than half of CSL’s revenue
in FY22
• Advertisement Policy:
CSI spends nearly 3-4% of its net sales in Ads.
(13/22)
• Diversified product portfolio:
CSL expanded its product offering to include bath accessories, kitchen sinks, mirrors and modular kitchens with an aim to establish the brand
“CERA” as a one-stop solution for all household lifestyle products.
• Diversified product portfolio:
CSL expanded its product offering to include bath accessories, kitchen sinks, mirrors and modular kitchens with an aim to establish the brand
“CERA” as a one-stop solution for all household lifestyle products.
(14/22)
• Liquidity:
CSL’s liquidity remained strong and improved further marked by strong internal accruals against low debt repayment obligations and presence of unencumbered cash and bank balance/liquid investments to the tune of around ₹576 crore as on
Sep 30, 2022.
• Liquidity:
CSL’s liquidity remained strong and improved further marked by strong internal accruals against low debt repayment obligations and presence of unencumbered cash and bank balance/liquid investments to the tune of around ₹576 crore as on
Sep 30, 2022.
(15/22)
• Furthermore, with its average working capital limit utilisation at around 15% for the trailing 12
months.
Its average collection period has also improved to around 42 days.
Its unutilised bank lines are adequate to meet its incremental WC needs over the next year.
• Furthermore, with its average working capital limit utilisation at around 15% for the trailing 12
months.
Its average collection period has also improved to around 42 days.
Its unutilised bank lines are adequate to meet its incremental WC needs over the next year.
(16/22)
Other Strengths:
• The company is almost debt free
• From 1st Feb 2023, they started a price rationalisation exercise because of which there is now a single MRP across the entire country.
• In the last 7 quarters, there has been no element of lost sales
Other Strengths:
• The company is almost debt free
• From 1st Feb 2023, they started a price rationalisation exercise because of which there is now a single MRP across the entire country.
• In the last 7 quarters, there has been no element of lost sales
(17/22)
• They are actively reducing their reliance on China imports
• With their manufacturing efficiency they can operate at even above 100% capacity utilisation
• They Operate on a unique cash and carry model which allows retailers and dealers to hold minimal inventory
• They are actively reducing their reliance on China imports
• With their manufacturing efficiency they can operate at even above 100% capacity utilisation
• They Operate on a unique cash and carry model which allows retailers and dealers to hold minimal inventory
(18/22)
• Weaknesses:
• They are in a legal battle with Milo Tile LLP with CSL’s 26% equity exposure at stake
• They have Linkages to cyclical real estate sector & presence in a competitive building product industry
• They are susceptible to RM & Fuel price volatility
• Weaknesses:
• They are in a legal battle with Milo Tile LLP with CSL’s 26% equity exposure at stake
• They have Linkages to cyclical real estate sector & presence in a competitive building product industry
• They are susceptible to RM & Fuel price volatility
(19/22)
• CSL vs Peers:
1. CSL has the highest OPM% at 16.57% while Kajaria is at 13.60%.
2. CSL’s P/E is at 38.1 which is very close to the industry average, whereas KCL is at 51.06.
3. CSL’s stock price CAGR over the past year has been 41%, while KCL has been -15%.
• CSL vs Peers:
1. CSL has the highest OPM% at 16.57% while Kajaria is at 13.60%.
2. CSL’s P/E is at 38.1 which is very close to the industry average, whereas KCL is at 51.06.
3. CSL’s stock price CAGR over the past year has been 41%, while KCL has been -15%.
(20/22)
• Numbers & Ratios:
Market Cap: ₹7,878 Cr.
Stock P/E: 38.8
RoCE: 21.9%
RoE: 16.3%
PEG: 4.47
Price to Sales: 4.62
Int Coverage: 56.2
NPM: 12.4%
D/E: 0.04
• Shareholding Pattern:
Promoter: 54.48%
FII: 17.52%
DII: 9.37%
Public: 18.64%
• Numbers & Ratios:
Market Cap: ₹7,878 Cr.
Stock P/E: 38.8
RoCE: 21.9%
RoE: 16.3%
PEG: 4.47
Price to Sales: 4.62
Int Coverage: 56.2
NPM: 12.4%
D/E: 0.04
• Shareholding Pattern:
Promoter: 54.48%
FII: 17.52%
DII: 9.37%
Public: 18.64%
(21/22)
• Conclusion:
CSL has been consistently outperforming the S&P BSE Basic Materials index & S&P BSE Small Cap index.
Sanitaryware’s growth was 18.95% and faucetware’s was 12% YoY.
Since they do not rely on Chinese imports, they are able to maintain their margins.
• Conclusion:
CSL has been consistently outperforming the S&P BSE Basic Materials index & S&P BSE Small Cap index.
Sanitaryware’s growth was 18.95% and faucetware’s was 12% YoY.
Since they do not rely on Chinese imports, they are able to maintain their margins.
(22/22)
Their manufacturing efficiency & plans for a greenfield facility can help them maintain their competitive edge.
What are your thoughts about the performance of Cera?
@caniravkaria @kuttrapali26 @chartmojo
Their manufacturing efficiency & plans for a greenfield facility can help them maintain their competitive edge.
What are your thoughts about the performance of Cera?
@caniravkaria @kuttrapali26 @chartmojo
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