Cera Sanitaryware: Q2FY23 Result Update
15-11-2022

Market Cap: Rs. 6,970 cr

CMP: Rs. 5,359 | PE: 37x TTM

Result	INR Crore	YoY growth	Comments
Revenue	414	5.34%	Driven by increase in sanitaryware revenue of 10%, faucetware revenue of 7%, wellness revenue by 10%, while decrease in tiles revenue of 20% YoY.
EBITDA	66	13.49%	Shifting focus towards more premium SKUs, have outsourced lower end SKUs to their vendors.

Key Highlights:

For Q2 FY23, 54% of the topline was from Sanitaryware, 34% from Faucetware, Tiles represented 10% and Wellness 2%.
The gross margin has improved at 56% in Q2FY23 against 51% in Q2FY22 mainly due to replacement of imports from China by in house manufacturing and outsourcing of lower end SKUs to their vendors.
Capacity utilization for Q2FY23 for Sanitaryware was at 115%, the highest in the past 10 years, for faucetware it was 116%.
The faucetware expansion program to take capacity to 4 lakh pieces per month from current 2.18 lakh pieces per monthcommenced from July 2022. The total cost of project is INR 69 crore to be funded entirely from annual operating cash flow.
No price hikes were taken as raw material prices were quite stable.

Management Outlook:

Continued demand for new product launches, which are of the more premium category.
Focus to remain on B2C sales, targeting the market segment which doesn’t time their purchase based on macroeconomic situation.
Further expansion in gross margin based on in house production of higher margin SKUs, outsourcing of generic products, import substitution from China.
Asset turn of 2-3 on new CAPEX worth INR 70 cr in faucet ware, same turnover on INR 129 cr CAPEX in sanitary ware.
In-house in Q2 was 40% in Sanitaryware, outsourcing was 60%.
In Faucetware, in-house was 48% and outsourcing was 54%. Versus last year, in-house in Sanitaryware was 41%, outsourcing was 59%. In Faucetware, in-house was 43% and outsourcing was 57%. The share from in house is poised to increase over the coming quarters based on better product mix.