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ICICI Securities Report
Besides registering lower than expected decline in Q1 revenues (down 47% YoY to Rs 1.43 billion versus our estimate of Rs 1.2 billion), Cera Sanitaryware Ltd. also reported a beat in its operational performance with Ebitda margin coming in at 4.7% (our estimate down 0.6%).
The beat was largely led by stricter cost control measures including rental renegotiation, trimming down on sales, marketing and publicity costs besides decline in natural gas prices.
With Cera Sanitaryware witnessing a faster recovery in volumes across its bathroom solutions segment in July 2020 (a mere 5% decline in revenues), we now build-in 11% revenue decline for FY21E.
We expect EBITDA margin to rebound to 15% by FY22E on the back of cost-saving initiatives, likely price hike in August 2020 and operating leverage.
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