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Thursday, November 25, 2010

Cera Sanitaryware Ltd:-Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis,views and outlook

Scripscan:Cera Sanitaryware Ltd
Bse code:532443

Story:Five points to qualify Cera as a great medium to long term buy.

1)Cera Sanitaryware Ltd is the third largest sanitaryware manufacturing company in the country.Industry leaders fascinates me a great deal and when the sector is verge of a boom period, adds up the icing in the cake.The company, which enjoys 20 per cent share of Rs 1000 crore organised sanitaryware market in India, has already taken up substantial expansion in last four year involving an investment of Rs 53 crore. It is now in the process of setting up a green field plant to make faucets, popularly known as CP fittings, with a production capacity of 2500 pieces per day at Kadi, where it already has its existing facility for sanitarywares.The plant is expected to be operational anyday now.

2)In order to cash in on the equity of CERA brand, the Company has also ventured into other bathroom related products like showers, tubs, etc. mainly sourced from reputed manufacturers. Apart from this, the Company has also started retailing premium Italian designer tiles in North India through its showroom Cera Vogue in Delhi.All this developments are expected to catapult the company in the top league.

3)Cera is pursuing overseas acquisition to expand its footprint and capture a larger global customer base. The company is in dialogue with leading European faucets and sanitaryware brand with intension of acquiring two super premium brands.There is major growth on cards with Cera becoming a complete bathroom solutions company.So we have a global player in our hand now folks.

4)Over the past 6 years, Cera has grown its topline by about 25% and bottomline by about 50% annualized.Wow,consistency backed by a strong visionary entrepreneur with huge fire in belly to make a hell lot of wealth for his shareholders.The company is further expected to grow atleast by 35% CAGR for the next 3 years.Gosh,we have a definite big wealth creator in our hand.

5)Cera should be a 500crs company in the next 3 years.Management is neat, dynamic and investor friendly.Cera generates good amount of cash flows to take care of its capex requirements.Valuation wise its quoting at low single digit PE its one year forward earnings.In the next 3-4 years it should be a 4-5 bagger.For a horizion of 9-12 months expect a return of 50%.

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