CERA - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.0

📊 Core Financials:

- Quarterly PAT at 56.6 Cr. vs 46.5 Cr. shows growth, though overall profit variation is negative (-16.8%).

- EPS of 182 ₹ reflects strong profitability.

- ROCE (22.4%) and ROE (18.3%) indicate healthy efficiency and shareholder returns.

- Debt-to-equity ratio of 0.04 highlights negligible leverage.

- Cash flows remain stable, supported by strong margins and low debt.

💹 Valuation Indicators:

- Current P/E of 29.0 is in line with industry average (28.9), suggesting fair valuation.

- P/B ratio ~ 5.0 (5,309 ₹ / 1,063 ₹), moderately high compared to book value.

- PEG ratio of 1.69 indicates valuation is slightly stretched relative to growth.

- Intrinsic value appears close to current price, offering balanced risk-reward.

🏭 Business Model & Competitive Advantage:

Cera Sanitaryware operates in sanitaryware, faucets, and tiles, serving housing and infrastructure demand. Its competitive advantage lies in brand recognition, product diversification, and strong distribution networks. The company benefits from rising urbanization and real estate growth, though margins are sensitive to input costs.

🎯 Entry Zone & Long-Term Guidance:

- Entry zone: 5,100–5,250 ₹ (near support levels and undervaluation zone).

- Long-term holding: Attractive for investors seeking exposure to housing and infrastructure cycles. Accumulate on dips for steady compounding.

Positive

• Strong ROCE (22.4%) and ROE (18.3%)
• Debt-to-equity ratio of 0.04 shows negligible leverage
• EPS of 182 ₹ reflects solid profitability
• DII holdings increased (+1.49%)

Limitation

• Quarterly profit variation (-16.8%) shows earnings pressure
• P/B ratio (~5.0) indicates moderate overvaluation
• PEG ratio of 1.69 suggests valuation stretched relative to growth
• Weak technical momentum (RSI 39.4, MACD negative)

Company Negative News

• Decline in FII holdings (-1.35%)
• Profit variation negative despite PAT growth

Company Positive News

• DII holdings increased (+1.49%)
• Quarterly PAT improved from 46.5 Cr. to 56.6 Cr.
• Dividend yield at 1.25% provides steady income

Industry

• Industry P/E at 28.9 indicates sector is fairly valued
• Growth driven by housing, real estate, and infrastructure expansion
• Competitive landscape with multiple domestic and global players

Conclusion

⚖️ Cera Sanitaryware shows strong fundamentals with high ROE/ROCE, low debt, and consistent demand drivers. However, valuations are moderately stretched and profit variation raises caution. Best accumulated near 5,100–5,250 ₹ for long-term exposure to housing and infrastructure growth.