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Cera Sanitaryware: Notebandi Hurts Quarter But Positive Later - Views on News from Equitymaster
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  • Feb 17, 2017 - Cera Sanitaryware: Notebandi Hurts Quarter But Positive Later

Cera Sanitaryware: Notebandi Hurts Quarter But Positive Later
Feb 17, 2017

Cera Sanitaryware (Cera) declared results for the quarter ended December 2016. The company reported a revenue growth of 2.5% YoY during the quarter, while profits came in higher by 11.4% YoY.

Performance Summary
  • Cera's revenues grew by 2.5% YoY during the quarter ended December 2016.
  • Sanitaryware contributed to 60% of their overall revenues. Faucets contributed to 21% of their overall revenues while, the tiles business contributed 15%. As expected, notebandi had an adverse impact on revenues this quarter. The company faced challenges in demand from November due to notebandi and also faced logistical challenges with supply of goods to its distributors since cash crunch had a big impact on the transport segment. Overall, revenue growth was subdued across all 3 business segments.
  • Operating profits grew by 6.5% YoY during the quarter. Operating profits grew on the back of lower expenditure. Operating margins grew by 0.6% YoY to 15.3% during the quarter. The margins expanded on the back of lower fuel costs coupled with lower other expenses. Fuel cost as a percentage to sales reduced by 1.5% as compared to a year ago.
  • Cera's net profits grew by 11.8% YoY during the quarter, in line with the operating performance.
  • The company has commenced its Joint Venture (JV) with Anjani Tiles in Andhra Pradesh (AP). As part of this JV, Cera will purchase tiles from Anjani at a cost plus model. Thereafter, the company will leverage on its distribution network to market these tiles. As per the management, this JV will contribute around Rs 1 billion to the topline in FY17.

    Financial Performance Snapshot
    (Rs m) 3QFY16 3QFY17 Change 9mFY16 9mFY17 Change
    Net sales (inclusive of excise duty) 2,402 2,462 2.5% 6718 7,311 8.8%
    Expenditure 2,048 2,085 1.8% 5787 6,158 6.4%
    Operating profit (EBITDA) 354 377 6.5% 932 1,153 23.7%
    EBITDA margin 14.7% 15.3% 13.9% 15.8%
    Other income 16 28 72.3% 64 64 1.2%
    Depreciation 41 42 0.8% 121 123 1.5%
    Finance cost 11 9 -17.5% 40 25 -37.2%
    Exceptional item 0.00 0.00 0.00 0.00
    Profit before tax 318 354 11.4% 834 1,069 28.2%
    Tax 117 130 10.8% 297 379 27.4%
    Effective tax rate 36.9% 36.6% 35.7% 35.4%
    Net profit 201 224 11.8% 537 690 28.6%
    Net profit margin 8.4% 9.1% 8.0% 9.4%
    No of shares (m) 13.0
    Diluted EPS (Rs)* 76.0
    P/E (times)* 0.0
    *trailing twelve month earnings excluding exceptional items
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