CERA SANITARYWARE is At ALL TIME HIGH with Positive Numbers

5 ago

CERA






Established market position in the sanitaryware segment and diversified revenue profile: Cera has a track record of nearly three decades, strong brand image and a large retail network in the sanitaryware industry. It is one of the leading players in this segment, which has been one of the largest revenue contributors over the years, accounting for around 47% of turnover in fiscal 2024.


Over the past few years, Cera has been leveraging its strong market position in the domestic sanitaryware industry by venturing into related business segments, such as faucets, tiles and wellness and allied products, thus becoming a complete bathroom solutions provider. Successful diversification into related businesses has helped lower dependence on the sanitaryware business, besides improving the efficiency of the distribution network.



Intense competition and volatile demand from the real estate sector led to sluggish revenue growth in fiscal 2024. However, with improving demand prospects expected and demand from real estate to remain healthy with projects reaching completion over the next 2-3 years, revenue in the sanitaryware segment is likely to see healthy growth over the medium term. Sanitaryware, faucetware, tiles and other products accounted for 47%, 36%, 10% and 7%, respectively, of the company’s turnover in fiscal 2024. Also, the company has presence across various domestic markets in south, east, north and west, providing adequate geographical diversity.



Healthy financial risk profile: Networth was healthy at Rs 1,358 crore and gearing low at 0.02 time as on March 31, 2024. Debt protection metrics are expected to remain strong, in the absence of large, debt-funded capex and healthy operating performance. Cash accrual is expected at ~Rs 180-230 crore per annum and will comfortably fund the capex plans in fiscals 2025 and 2026 and incremental working capital requirement. Hence, reliance on debt is expected to be low, sustaining strong debt metrics over the medium term.



Company is almost debt free.

Company has been maintaining a healthy dividend payout of 31.4%.

ZERO DEBT COMPANY

Cash and Cash Equivalents
of Rs. 828 crore; primarily
liquid investments.

• No Contingent Liabilities for
Joint Ventures



POSITIVE FREE CASH FLOW EVERY YEAR

Consistent cash generation each year
• Annual Capex requirement < Free Cash flow
generation.

• Increasing gap between annual cash flow generation
less dividend outflow and capex.

• Regularly paid dividends for the last 30 years +




AGGRESSIVE FOCUS ON CAPEX

Fixed Asset turnover of ~5.6x.

• Uniform organization-wide policy to
monitor receivables – credit not used
to drive revenues.

• ERP automatically shuts down fresh
supplies to dealers / customers with
dues in excess of 45-60 days






Multilayered Marketing Infrastructure.
⚫ Enhances retail experiences, retailer owned
⚫ Currently 1,067 Cera Style Centre’s (CSC’s)
operational
⚫ Over 1,400 CSCs planned in the next 3-4 years
⚫ Minimum size of showroom ranges between 100 sq.
ft. - 500 sq. ft.



Multilayered Marketing Infrastructure

⚫ 11 CERA Style Studios (CSS): Ahmedabad / Mumbai /
Bengaluru / Kolkata / Cochin / Hyderabad / Trivendrum
/ Morbi / Kadi / Mohali & Lucknow (Upcoming)
⚫ Discerning customers including influencer's can touch
and feel products
⚫ No sales orientation / pressure
⚫ The average size these company owned showroom are
approx. 7,000 sq.ft.
⚫ With more than 14,000 sq.ft. of display, Hyderabad CSS is
the largest company showroom in this industry