Cera Sanitaryware posted a 27.4% revenue growth to Rs 603 Cr in Q2FY27, driven by strong volume and pricing. Despite top-line gains, net profit dipped 1% to Rs 56 Cr due to high input costs. Axis Securities maintains a 'BUY' rating but has lowered the target price to Rs 6,100, citing raw material price volatility.
Cera Sanitaryware Q2 Revenue Climbs 27%, Profit Dips 1%
Revenue Rs 603 Cr; Net Profit Rs 56 Cr.
Reader Takeaway: Strong double-digit volume growth faces headwinds from elevated brass and gas costs, pressuring quarterly margins.
What just happened
Cera Sanitaryware reported a robust 27.4% year-over-year revenue growth to Rs 603 Cr for Q2FY27. Performance was supported by a 16.6% increase in volumes and a 9.1% contribution from pricing actions. However, net profit fell by 1% to Rs 56 Cr as input costs weighed on the bottom line.
Why this matters
Investors are watching how the company balances aggressive volume growth against inflationary pressures. While EBITDA margins dropped 200 bps year-over-year to 12.2%, the company showed sequential recovery from 10.1% in the previous quarter. Management expects further margin expansion in the second half as high-cost legacy projects clear and recent price hikes take effect.
The backstory
The company is aggressively scaling its operations, with faucetware capacity rising from 4 lakh to 5 lakh units per month. Expansion into high-growth regions like Uttar Pradesh, Bihar, and Jharkhand is anchoring the revenue momentum. The company has also tightened its working capital, reducing the cycle to 58 days from 77 days.
Risks to watch
Input cost volatility remains the primary concern, specifically the 58% spike in brass prices. Competitive intensity from unorganized players and potential demand slowdowns could keep margins volatile. Consequently, Axis Securities has reduced the valuation multiple to 26x to account for these macro uncertainties.
What to track next
Watch for the management decision regarding a new greenfield sanitaryware facility expected by Q4FY27. Ongoing operational efficiencies and AI-led cost optimization programs are key factors for margin recovery in the coming quarters.