BusinessLogrBusinessLogr
  • Home
  • Stocks
  • Finance
  • Business
  • Company
  • Economy
  • Industry
  • Investing
  • Car News
  • Contact Us!
Reading: Weak construction, real estate demand hurt Cera Sanitaryware
Share
Aa
BusinessLogrBusinessLogr
Aa
  • Home
  • Stocks
  • Finance
  • Business
  • Company
  • Economy
  • Industry
  • Investing
  • Car News
  • Contact Us!
Follow US
© 2023 BusinessLogr News Network.
BusinessLogr > Industry > Weak construction, real estate demand hurt Cera Sanitaryware
Industry

Weak construction, real estate demand hurt Cera Sanitaryware

deep
Last updated: 2015/12/24 at 11:37 AM
deep Published December 24, 2015
Share
3 Min Read
SHARE

Cera Sanitaryware shares are trading at around 31 times earnings for FY16 and unless the revenue growth reverts back to 25-30%, the stock may continue to remain under pressure.

Cera Sanitaryware Ltd shares have slipped around 22% since mid-April over concerns of a slowing real estate and housing market. They had, however, touched an all-time high in April on expectations of upbeat revenue growth buoyed by the government’s cleanliness campaign—Swachh Bharat Abhiyan for building toilets.

It is the unorganized companies that have benefited from the programme so far, because of lower costs. “Only when the capacity of unorganized players reaches 100%, the organized players will get the benefit,” said Abneesh Roy, associate director, institutional equities, at Edelweiss Securities Ltd.

A few analysts have scaled down Cera Sanitaryware’s revenue growth forecast. They estimate around 16-17% revenue growth in the second half of FY16 compared with 18-20% guidance given by the management.

Click here for enlarge

The real estate slowdown is hurting the demand for tiles and sanitaryware. Earlier sanitaryware manufacturers would clock revenue growth of anywhere between 20% and 30%, which has now slowed. The demand scenario is muted from the construction sector because of delayed project completions and piling up of inventory.

Around 42% of Cera Sanitaryware’s market share comes from southern India. With unseasonal rains hitting Tamil Nadu and Andhra Pradesh in the past few weeks, construction activity may get affected in the south and hurt demand further.

Cera Sanitaryware clocked the worst revenue growth of 13% in over two years at Rs.225 crore in the three months ended September. Even peers such as HSIL Ltd are affected, clocking flat revenue growth.

Cera Sanitaryware is moving into other verticals such as tiles and faucets, where the base is low and they can see incremental growth. Slightly less than two-thirds of Cera Sanitaryware’s revenue contribution comes from sanitaryware, about a fourth comes from faucets and the rest is from tiles.

Earlier in the week, Cera Sanitaryware entered into a joint venture agreement with Anjani Tiles Ltd in Andhra Pradesh by acquiring a 51% stake in a phased manner for aroundRs.18.4 crore. Cera Sanitaryware is expecting to scale up production in the tiles business by around two to three times.

The management expects operating margins to be over 15% in the medium term, led by price hikes in the December quarter. In the September quarter operating profit margins declined around 90 basis points to 12.2% compared with a year ago due to cost pressures. A basis point is a hundredth of a percentage point.

Cera Sanitaryware shares are trading at around 31 times earnings for FY16 and unless the revenue growth reverts back to 25-30%, the stock may continue to remain under pressure.
[“source -financialexpress”]

You Might Also Like

Why a cutting-edge billing system is essential in 2025: Accelerate Your Telecom Growth

SEO for Life Sciences: How to Outrank Competitors and Drive Organic Traffic

Cognitive Market Research: A Method for Obtaining Industry-Specific Impactful Insights via Industry Blogs

How to Start a Blog That Makes You Money

Simulated intelligence Patterns in Telecom 2025: Tackling Basic Industry Difficulties

TAGGED: real estate demand hurt Cera Sanitaryware, Weak construction
deep December 24, 2015
Share this Article
Facebook Twitter Email Print
Share
Previous Article Divergent trend in export volumes
Next Article Finance Ministry okays 2% fee on metro air routes for regional fund

Most Viewed Posts

  • Environmental thematic investing set for strong growth in 2022
  • Second income center in banks
  • T-Mobile Adds Mexico, Canada to Simple Choice Plan
  • Tieghan gerard income in banks
  • 20 Fitness Franchises: Planet Fitness and Beyond

Most Viewed Posts

  • Environmental thematic investing set for strong growth in 2022
  • Second income center in banks
  • T-Mobile Adds Mexico, Canada to Simple Choice Plan
  • Tieghan gerard income in banks
  • 20 Fitness Franchises: Planet Fitness and Beyond

Recent Posts

  • 14 Magnificent Blogs From Large Businesses to Inspire Your Content Marketing
  • Investing in Youth: The Role of Development Banks

© 2023 BusinessLogr News Network.

Removed from reading list

Undo
Welcome Back!

Sign in to your account

Lost your password?