CERA - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.0
| Stock Code | CERA | Market Cap | 6,775 Cr. | Current Price | 5,253 ₹ | High / Low | 7,275 ₹ |
| Stock P/E | 30.1 | Book Value | 1,063 ₹ | Dividend Yield | 1.24 % | ROCE | 22.4 % |
| ROE | 18.3 % | Face Value | 5.00 ₹ | DMA 50 | 5,072 ₹ | DMA 200 | 5,525 ₹ |
| Chg in FII Hold | -0.41 % | Chg in DII Hold | 0.17 % | PAT Qtr | 35.0 Cr. | PAT Prev Qtr | 56.6 Cr. |
| RSI | 56.2 | MACD | 122 | Volume | 4,490 | Avg Vol 1Wk | 8,981 |
| Low price | 4,461 ₹ | High price | 7,275 ₹ | PEG Ratio | 1.75 | Debt to equity | 0.04 |
| 52w Index | 28.1 % | Qtr Profit Var | -23.7 % | EPS | 165 ₹ | Industry PE | 62.2 |
📊 Financials: CERA demonstrates strong efficiency with ROE at 18.3% and ROCE at 22.4%. EPS of ₹165 supports earnings visibility, while debt-to-equity at 0.04 highlights a nearly debt-free balance sheet. However, quarterly PAT declined from ₹56.6 Cr. to ₹35.0 Cr. (-23.7%), showing short-term earnings weakness.
💹 Valuation: The stock trades at a P/E of 30.1, well below the industry average of 62.2, suggesting relative undervaluation. Book value of ₹1,063 gives a P/B of ~4.9, moderately high but justified by efficiency metrics. PEG ratio of 1.75 indicates growth is fairly priced. Intrinsic value appears supportive for long-term holding.
🏢 Business Model: Operating in building materials and sanitaryware, CERA benefits from housing demand and infrastructure growth. Its competitive advantage lies in strong efficiency metrics and brand positioning. Institutional sentiment is mixed, with FII holdings down (-0.41%) but DII holdings up (+0.17%).
🎯 Entry Zone: Attractive entry between ₹5,000–5,100, near 50 DMA support. Long-term investors may hold for 3–5 years, with exit considerations if quarterly profits continue to decline or ROE falls below 15%.
Positive
- Strong ROCE (22.4%) and ROE (18.3%).
- Debt-to-equity ratio of 0.04 indicates a nearly debt-free balance sheet.
- EPS of ₹165 supports earnings visibility.
- DII holdings increased (+0.17%), showing domestic institutional support.
Limitation
- Quarterly PAT declined (-23.7%), showing earnings weakness.
- PEG ratio of 1.75 suggests growth is fairly priced.
- FII holdings decreased (-0.41%), showing reduced foreign investor confidence.
- Trading volume below weekly average, showing weaker participation.
Company Negative News
- Recent quarterly PAT decline highlights short-term earnings weakness.
- Reduced foreign institutional interest (-0.41%).
Company Positive News
- DII holdings increased (+0.17%), reflecting domestic institutional confidence.
- Stock trading above 50 DMA, supported by bullish MACD momentum.
Industry
- Industry PE is 62.2, higher than CERA’s PE of 30.1, suggesting relative undervaluation.
- Building materials and sanitaryware sector benefits from housing demand and infrastructure growth in India.
Conclusion
✅ CERA is a fair long-term candidate with strong efficiency metrics and relative undervaluation, but declining profits and reduced foreign investor confidence limit upside. Entry near ₹5,000–5,100 offers a safer setup, while exit near ₹7,200–7,250 is prudent unless earnings growth resumes. A 3–5 year holding horizon is viable with close monitoring of profitability and institutional sentiment.