The company which was recommended by Kensource last year, has delivered stellar quarterly results
Cera Sanitaryware which was recommended by Moneylife in our Kensource stockletter on 4 May 2012 has continued to impress. Its net sales for the quarter ended 31 March 2013 grew 58% year-on-year (y-o-y), from Rs100.21 crore to Rs157.95 crore. During the same quarter, its operating profit grew 30% y-o-y to Rs20.73 crore. Its net profit rose even higher, from Rs9.29 crore to Rs13.93 crore, a 49.9% growth.
Earlier, we had recommended the stock in our Kensource Stockletters, a subscription-only service, at Rs265 on 4 May 2012. Currently the stock is trading at Rs440 at time of writing this piece.
A closer analysis into Cera Sanitaryware results reveals that net profit has been steadily growing since June 2010 from Rs5.99 crore to Rs13.93 crore, without a single fall in y-o-y growth rate. Similarly, sales too have been increasing without a dip in growth rate. The average three-quarter growth rate is 55% while sales growth for the March 2013 quarter trumped it by growing at 58% y-o-y. The company has been managing its operations quite well, in a volatile environment. Yet the market seems to be discounting this stock, with its market capitalisation quoting at just 6.79 times its operating profit. Its return on networth and return on capital employed stood at 33% and 27% respectively, both astonishingly high, for a ceramics manufacturer selling end products.
Total assets of the company stood at Rs379.66 crore as at 31 March 2013, when compared to Rs294.59 crore recorded at the same date last year.
The production capacity is expected to go up to 2.7 million pieces per annum from 2.0 million pieces. It manufactures faucets, sanitaryware and bathware. The company continues to import and market, under the brand name CERA, wellness range of products like shower cubicles, shower panels, steam cubicles in addition to high-end sanitaryware as well as kitchen sinks, mirrors and sensor products.
The company’s board has recommended a dividend of Rs4 per full paid equity shares of Rs5 each.
For more information on Kensource stockletters, check the link here.
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