Sanitaryware Industry Research Report By ICICI Securities

The Indian sanitaryware industry, currently pegged at Rs35.6bn, is growing in single-digits over the past two years as compared to 13-15% CAGR over FY10- FY14, largely due to significant slowdown in the real estate sector. Further, lower potential for consumer shift from unbranded to branded products and significantly lower replacement opportunities in the sanitaryware space, which have been strong growth triggers for allied products like tiles and faucets, is expected to keep sanitaryware industry growth under check. With the real estate sector likely to see only a gradual uptick, we foresee the sanitaryware industry growth to remain under pressure till FY18. We however expect the mass market focused sanitaryware players to continue to outpace growth over the premium players in such testing times. We initiate coverage on the sector with HOLD rating on Cera Sanitaryware (CRS) with a target price of Rs2,506 per share and ADD rating on HSIL with target price of Rs319 per share.