Cera Sanitaryware, Kajaria Ceramics -Aspirations Accelerating Growth: Prabhudas Lilladher Initiates Coverage

Prabhudas Lilladher Report

Home building materials (plastic pipes, tiles, wood panel, sanitaryware and faucets) is estimated to touch Rs 2.7 trillion by FY26 from Rs 1.3 trillion in FY22. Ceramic tiles sector (domestic consumption volume) reported 5.4% compound annual growth rate over FY17-21, while sanitaryware and facets sector () reported 8.3%/12.0% CAGR over FY17-21.

Considering strong underlying demand along with healthy growth momentum, we initiate coverage on Kajaria Ceramics Ltd. and Cera Sanitaryware Ltd. underpinned by-

1. healthy growth in real estate sector,

2. increased government spending on irrigation, water supply and sanitation and urban infrastructure;

3. benefits from industry consolidation; and

4. shift from unorganised to organised market, due to geographical expansions of large organised players.

We expect Kajaria Ceramics/Cera Sanitaryware to clock revenue/Ebitda/profit after tax CAGR of 14.7%/ 24.1%/ 29.8% and 13.6%/ 16.3%/ 16.4% respectively over FY23-25E.

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