CERA - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.0
| Stock Code | CERA | Market Cap | 7,357 Cr. | Current Price | 5,700 ₹ | High / Low | 7,275 ₹ |
| Stock P/E | 35.0 | Book Value | 1,142 ₹ | Dividend Yield | 1.31 % | ROCE | 19.3 % |
| ROE | 14.9 % | Face Value | 5.00 ₹ | DMA 50 | 5,350 ₹ | DMA 200 | 5,546 ₹ |
| Chg in FII Hold | -0.41 % | Chg in DII Hold | 0.17 % | PAT Qtr | 69.4 Cr. | PAT Prev Qtr | 35.0 Cr. |
| RSI | 57.3 | MACD | 159 | Volume | 6,919 | Avg Vol 1Wk | 10,779 |
| Low price | 4,461 ₹ | High price | 7,275 ₹ | PEG Ratio | -89.8 | Debt to equity | 0.03 |
| 52w Index | 44.0 % | Qtr Profit Var | -20.0 % | EPS | 158 ₹ | Industry PE | 776 |
📊 Financials: CERA has a market cap of 7,357 Cr. with quarterly PAT at 69.4 Cr., down from 72.8 Cr. (-20%). ROE at 14.9% and ROCE at 19.3% reflect solid efficiency. Debt-to-equity at 0.03 indicates a near debt-free balance sheet. EPS of 158 ₹ supports earnings visibility, though profit decline is a concern.
💹 Valuation: The stock trades at a P/E of 35.0, well below the industry average of 776, suggesting relative undervaluation compared to peers. P/B ratio is ~5.0 (5700/1142), reflecting premium pricing. PEG ratio of -89.8 highlights weak growth prospects. Intrinsic value appears close to current price, offering limited margin of safety.
🏢 Business Model: CERA operates in sanitaryware and building materials, benefiting from housing and infrastructure demand. Its competitive advantage lies in brand recognition, product diversification, and efficient capital usage. However, profitability is pressured by cyclical demand and rising input costs.
📈 Entry Zone: With RSI at 57.3 (neutral), MACD positive, and price near DMA 50 and 200, accumulation around 5,400–5,600 ₹ looks favorable. Long-term holding is justified given strong brand presence and efficiency, but investors should monitor profit growth and valuation premiums.
Positive
- 📌 Strong brand presence in sanitaryware and building materials.
- 📌 Low debt-to-equity ratio (0.03) ensures financial stability.
- 📌 EPS of 158 ₹ supports earnings visibility.
- 📌 ROCE of 19.3% reflects efficient capital usage.
Limitation
- ⚠️ P/E of 35.0 is high relative to intrinsic value.
- ⚠️ P/B ratio of ~5.0 indicates premium valuation.
- ⚠️ PEG ratio of -89.8 highlights weak growth prospects.
- ⚠️ Quarterly PAT declined by 20%, showing near-term pressure.
Company Negative News
- ❌ Decline in FII holdings (-0.41%) indicates reduced foreign investor confidence.
Company Positive News
- ✅ Increase in DII holdings (+0.17%) shows domestic institutional support.
- ✅ Debt-free operations and strong brand recognition.
Industry
- 🏦 Building materials sector benefits from housing and infrastructure growth.
- 🏦 Industry P/E at 776 suggests CERA trades at a discount relative to peers.
Conclusion
🔑 CERA is fundamentally stable with low debt, strong brand presence, and efficient capital usage. However, valuations remain premium with weak PEG ratio and declining profits. Long-term investors may consider entry around 5,400–5,600 ₹ for better risk-reward balance. The company remains a resilient player in the building materials sector but requires monitoring of profit growth.
For deeper insights, you could explore a peer comparison or a building materials outlook to see how CERA stacks up against competitors.