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Cera Sanitaryware: Good Performance in Tough Times - Views on News from Equitymaster
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  • Oct 24, 2016 - Cera Sanitaryware: Good Performance in Tough Times

Cera Sanitaryware: Good Performance in Tough Times
Oct 24, 2016

Cera Sanitaryware (Cera) declared results for the quarter ended September 2016. The company reported a revenue growth of 12.5% YoY during the quarter, while profits came in higher by 40.6% YoY.

Performance Summary
  • Cera's revenues grew by 12.5% YoY during the quarter ended September 2016.

    Sanitaryware contributed to 60% of their overall revenues and reported a growth of 12% during the quarter as compared to a year ago. Faucets contributed to 21% of their overall revenues and reported a growth of 12% during the quarter. While, the business from tiles contributed to 15% of their overall revenues and reported a growth of 37% during the quarter on a lower base. The demand from metros continues to remain subdued. Excess buildup of inventory in the metros is hampering the growth of building materials as developers are not willing to set up new projects in these areas wherein there is an already excess inventory situation. Currently, growth is coming in from Tier-II, Tier-III and Tier-IV towns.
  • Operating profits grew by 41.7% YoY during the quarter. Operating profits grew on the back of lower expenditure. Operating margins grew by 3.2% YoY to 15.8% 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 1.7% as compared to a year ago.
  • Cera's net profits grew by 40.6% 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.

    Standalone financial performance
    (Rs m) 2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    Net sales (Inclusive of Excise Duty) 2,320 2,610 12.5% 4,316 4,849 12.4%
    Expenditure 2,028 2,197 8.3% 3,742 4,074 8.9%
    Operating profit (EBDITA) 292 413 41.7% 574 775 35.1%
    EBDITA margin (%) 12.6% 15.8% 13.3% 16.0%
    Other income 35 24 -33.1% 47 36 -23.1%
    Depreciation 39.5 41.3 4.6% 76.3 81.0 6.2%
    Interest 11.85 8.86 -25.2% 29.41 16.32 -44.5%
    Profit before tax 276 387 40.3% 516 714 38.5%
    Tax 97 135 180 249
    Effective tax rate 35% 35% 35% 35%
    Profit after tax/(loss) 179 251 40.6% 335 465 38.7%
    Net profit margin (%) 7.7% 9.6% 7.8% 9.6%
    No. of shares (m) 13.0
    Diluted earnings per share (Rs)* 74.2
    Price to earnings ratio (x) 34.8

    (*On a trailing 12-month basis & excluding exceptional Items)

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