Cera Sanitaryware Q3FY18: 18.5% upside potential over 18 months; Buy

SKP Research | Feb. 12, 2018, 4:59 p.m.

VALUATION

Better economic growth, leaving more disposable income for discretionary life style consumption, rapid urbanisation, changing customer preference towards quality branded products particularly amongst the growing mass affluents, increasing nuclear families and Governments’ thrust on “Housing for All” coupled with strong brand equity and recall and distribution network, augers well for the company. It has de-risked its growth strategy with an asset light business model, adopting a joint venture route in tiles.

 We have valued the stock on the basis of P/E - method of relative valuation – of 30x on FY20E earnings. With the introduction of FY20E numbers we have revised our rating on the stock and recommends buy with the target price of Rs 3,912 (~18.5% upside), in 18 months.



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