Mr. Bharat Mody, strategic advisor addr the call.Highlights by Capital Mkt
Bathroom products maker Cera Sanitaryware has achieved 13% rise in top line to Rs 225.30 crore and a 14% increase in net profit to Rs 17.88 crore in the second quarter of the current fiscal ended on September 2015.The company witnessed growth in all segment in Q2, with highest growth witnessed in Faucetware, meanwhile modest growth observed in Sanitaryware and Tiles segment. The company registered growth of 44% in Faucetware, 16% in tiles, and 8% in sanitaryware in Q2FY16.The Company received 63% business from sanitaryware, 21% business from faucetware,13% from tiles, and balanced 3% from allied products. The Company expects sanitaryware business will reduce to 58% from present 63% in mid-term (3-5 years), but faucetware, tiles, and bathroom ware business will increase during the period.The company hasutilized 90% ofincreased faucetware capacity of 7,000-8000 units a day in Q2 FY 2016 and plans to achieve a 95% of capacity utilization by end of FY 2016.The company has maintained rolling capex of around Rs 180 crore for next 3 years which will mostly funds from internal accrual.The company plans expansion of sanitaryware capacity to around 32-33 lakh units from present capacity of 30 lakh units.The Company has entered into a joint venture agreement with Anjani Tiles for setting up a plant to manufacture high-quality ceramic vertified tiles, in Andhra Pradesh. The Company envisages building initial capacity of around 10000 sq meter per day with initial project cost of around Rs 68 crore. The commercial production is expected to start by end of FY 2016.
The Company also decided to open offices in Dubai and/or Sharjah in order to increase exports to West Asian countries.The company has taken price hike of around 3-7% across the products effective from 1st December 2015 to maintain healthy margin.
The Company maintains marketing expenditure of 4.5% as a percentage of sales. It includes media budgets, also includes marketing.The Company has lowered its revenue guidance to 18-20% for FY 2015 from previous forecast of 20-22% due to lack of demand for the products amid low replacement demand from consumers and sluggish growth in real estate sector. Also, the company guides to maintain EBITDA margin at around 15%.
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