CERA - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.0

🧾 Fundamental Analysis

CERA Sanitaryware is a fundamentally strong company with solid profitability and low debt, though current valuations are slightly stretched. Here's the breakdown

Metric Value Implication

Market Cap ₹8,440 Cr Mid-cap; niche player with strong brand equity

Stock P/E 34.3 Fairly valued relative to industry PE

PEG Ratio 2.04 Slightly overvalued relative to growth; not alarming

ROCE / ROE 22.4% / 18.2% Excellent; strong capital efficiency and return on equity

Dividend Yield 1.00% Decent; adds value for long-term holders

Debt-to-Equity 0.05 Very low; strong balance sheet

EPS ₹190 Strong earnings base

Qtr Profit Var +15.8% Positive momentum; earnings improving

FII/DII Holding Change -3.40% / +5.13% DII confidence rising; FII trimming exposure

📉 Technical Analysis

Current Price: ₹6,482

DMA 50 / DMA 200: ₹6,627 / ₹6,724 → Trading below both; bearish trend

RSI: 40.1 → Approaching oversold zone; potential for rebound

MACD: -20.9 → Bearish momentum

Volume: Below average; weak short-term conviction

💰 Valuation & Entry Zone

Given the strong fundamentals and improving earnings, CERA is a good candidate for long-term investment, though not at any price.

Ideal Entry Zone: ₹6,000–₹6,300

This range offers a reasonable margin of safety and aligns with technical support

Avoid fresh entry above ₹6,700 unless earnings growth accelerates.

📈 Long-Term Investment Outlook

Pros

High ROE and ROCE

Debt-free balance sheet

Improving profitability

DII confidence increasing

Cons

PEG > 2 suggests moderate overvaluation

FII exit may reflect short-term caution

Technicals still weak

CERA is a quality compounder in the building materials space, and long-term returns look promising if growth sustains.

🏁 Exit Strategy / Holding Period

If you already hold this stock

Short-Term: Hold; RSI suggests nearing bottom

Medium-Term: Consider partial exit near ₹7,500–₹8,000 if valuation stretches

Long-Term: Hold for 3–5 years if ROE stays >18% and PEG drops below 1.5

Exit fully if price crosses ₹9,000 without earnings support, or if ROCE drops below 15% for consecutive quarters.

Would you like a comparison with Kajaria Ceramics or other home improvement stocks to assess relative value?

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