VCC has reported that Nalanda Capital has invested Rs. 14-15 crore to increase its stake in Cera to 2.2.
The important thing to learn from this is that the (mere) fact that a stock has run up in the recent past is no reason to not buy the stock. What you need to coolly analyze is whether the fundamentals for the next couple of years are still in place for more gains.
Cera appears to be on strong ground. VCC pointed out that for the first two quarters of FY14, Cera reported over a 41 per cent increase in sales to Rs 285 crore with net profit rising 7.5 per cent to Rs 21.8 crore compared with the same period last year. It also quoted CRISIL as stating that Cera’s entry into the faucet ware business was positive as it provides a significant scalable opportunity. CRISIL expects the faucet business to grow at 29 per cent CAGR and become profitable during FY13-15.
Cera is quoting at a P/E of 18 times based on TTM EPS of Rs. 37.72. This is not cheap but is also not frightfully expensive for a powerhouse stock with proven market leadership qualities.
If you don’t have Cera Sanitaryware in your portfolio, you need to give it some very serious thought (I already have a nice chunk of Cera (along with Kajaria Ceramics) in my portfolio but am nibbling more even at CMP and will add on declines).