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ICICI Securities Report
We downgrade Cera Sanitaryware Ltd. to ‘ADD’ from ‘Buy’ post the sharp ~13% stock price rally over the past one month, whereby, its valuation appears to be full (35.2 times PER FY26E) and thus offers limited upside.
We continue to believe Cera would be a major beneficiary of the ongoing traction in the real estate market due to its strong brand, widespread distribution and robust net-debt balance sheet. We estimate Cera to witness Ebitda/adjusted profit after tax compound annual growth rate of 13.1%/19.2% over FY24-27E driven primarily by the faucetware segment with superior return ratios (RoE of 19.7% in FY26E).
We maintain our earnings estimate with an unchanged Sept’25E target price of Rs 8,416, set at 35x PER 1-year forward (in line with historical 10-year average, 1-year forward P/E).
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