Result Update | Ceramic Products

July 11, 2013

Cera Sanitaryware
Increasing brand visibility to be key driver
Y/E March (` cr) 1QFY14 127 20 15.7 4QFY13 158 21 13.1 14 % chg (qoq) (19.9) (4.1) 258bp (20.0) 1QFY13 91 16 17.2 9 % chg (yoy) 39.9 27.5 (152)bp 21.2

BUY
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net debt Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Ceramic products 667 13 0.3 567/282 7,826 5 19,676 5,935 CERA.BO CRS IN

`527 `613
12 Months

Total operating income

EBITDA EBITDA Margin (%)

Adj. PAT 11 Source: Company, Angel Research

Cera Sanitaryware (CSL) reported strong set of numbers for 1QFY2014. Top line surged by 39.9% yoy to `127cr, 8.2% higher than our expectation of `117cr. On operating front, EBITDA grew by 27.5% yoy to `20cr while margins dip by 152 basis point yoy to 15.7% owing to rise in raw material cost. Net profit rose by 21.2% yoy to `11cr, amidst higher EBITDA growth on account of higher tax expense (35% of PBT) and lower other income.

Expanded capacity and high brand visibility to aid revenue growth

CSL has expanded its capacity of sanitaryware unit from 2.0mn pieces per annum (p.a.) to 2.7mn pieces p.a. in FY2013 and is planning to expand it further to 3mn pieces p.a. in FY2014. The expansion will thus enable CSL to en-cash on the opportunity emerging from the consistently growing sanitaryware demand owing to factors like urbanization, rising standard of living, changing lifestyle, growing construction activities etc. Simultaneously, high brand visibility, due to consistent marketing efforts (marketing cost has grown at 46.3% CAGR over FY2008-13), is expected to further boost revenue growth going forward.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 55.5 0.1 18.7 25.7

Outlook and valuation

We expect CSLs consistent marketing efforts coupled with expansion of its product portfolio (in the tiles segment) to help it post a revenue CAGR of 27.8% over FY2013-15E to `797cr. The EBITDA and net profit are expected to grow at a CAGR of 20.5% and 18.3% over the same period to `109cr and `65cr respectively. The stock is currently trading at a PE of 10.3x FY2015E. We maintain our Buy recommendation with a revised target price of `613, based on a target PE of 12x for FY2015E. Key financials (Standalone)
Y/E March (` cr) Net sales % chg Adj. net profit % chg EBITDA Margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

Abs.(%) Sensex CSL

3m 6.1 19.7

1yr 12.5 82.8

3yr 9.7 295.8

FY2011 243 27.0 27 38.4 18.8 21.7 24.3 6.0 27.3 25.6 2.7 14.3

FY2012 319 31.5 32 16.7 16.7 25.3 20.8 4.8 25.5 23.2 2.1 12.7

FY2013 488 52.8 46 44.3 15.4 36.5 14.4 3.7 29.0 26.7 1.4 9.0

FY2014E 631 29.4 54 16.7 14.5 42.6 12.4 2.9 26.5 25.7 1.1 7.3

FY2015E 797 26.2 65 19.9 13.7 51.1 10.3 2.3 25.3 25.0 0.8 6.2

Twinkle Gosar Tel: 022- 3935 7800 Ext: 6848 Gosar.twinkle@angelbroking.com

Please refer to important disclosures at the end of this report

Cera Sanitaryware | 1QFY2014 Result Update

Exhibit 1: 1QFY2014 performance (Standalone)

Y/E March (` cr) Total operating income Net raw material (% of Sales) Employee cost (% of Sales) Other Expenses (% of Sales) Total expenditure EBITDA EBITDA Margin (%) Interest Depreciation Other income PBT (% of Sales) Tax (% of PBT) Reported PAT PATM (%)
Source: Company, Angel Research 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy) FY2013 FY2012 % chg

127
55

158
79

(19.9)
(30.3) 3.0 (16.9) (22.2)

91
34

39.9
62.3 25.5 26.3 42.4

488
214

321
124

52.2
72.4

43.5
17

50.0
16

37.5
13

43.8
58

38.7
43

52.2
36.3 14.1 44.7

13.2
35

10.2
42

14.7
28

11.9
115

13.3
101

27.7
107

26.7
137

30.6
75

23.5
387

31.4
267

20
15.7

21
13.1

(4.1)
258bp

16
17.2

27.5
(152)bp

101
20.7

53
16.7

89.3
407bp

1
3

2
3

(35.0)
4.5

1
2

15.1
29.2

7
9

4
8

85.3
19.0

1
17

4
20

(62.9)
(13.1) 4.1 (20.0)

2
14

(11.8)
23.9 29.2 21.2

9
94

7
49

31.6
92.8 28.3 127.0

13.5
6

12.4
6

15.2
5

19.2
22

15.2
17

34.5
11

28.8
14

33.1
9

23.0
72

34.6
32

8.8

8.8

10.2

14.8

9.9

Exhibit 2: Actual v/s Angel Estimates

Actual v/s Angel's Estimates Total Income EBITDA EBITDA Margin Adjusted PAT
Source: Company

Actual (` cr) 127 20 15.7 11

Estimate (` cr) 117 18 15.4 11

% variation 8.2 10.6 34bp 2.5

Top-line marginally higher, profits in line with expectation

For 1QFY2014, CSLs top line surged by 39.9% yoy to `127cr, 8.2% higher than our expectation of `117cr. On operating front, EBITDA grew by 27.5% yoy to `20cr while margins dip by 152 basis point yoy to 15.7% vis--vis our estimate of 15.4%. The dip in margin is attributable mainly to rise in raw material cost by 600 basis points from 37.5% in the same quarter previous year to 43.5% which was offset to a large extent offset due to reduced other manufacturing expenses (employee, power and other expenses) by 449bp. Net profit rose by 21.2% yoy to `11cr, amidst higher EBITDA growth on account of higher tax expense (35%) and lower other income.

July 11, 2013

Cera Sanitaryware | 1QFY2014 Result Update

Exhibit 3: Revenue growth momentum continues

180 160 140 120 40.0 52.0 37.9 27.3 28.9 32.8 55.2 57.6 70 39.9 60 50

Exhibit 4: High RM cost offset by fall in other expenses

24 21 18 15 18.8 16.0 16.5 15.9 17.2 16.5 16.0 13.1 15.7 20 18 16 14 12 10 8 6 4 2 0

158

20

21

128

127

( ` cr)

16

111

( ` cr)

(%)

100

91

73

60 40 20 0

82

65

20 10 0

6 3 0

1QFY12

2QFY12

12

12

30

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

1QFY14

Revenue (LHS)

yoy growth (RHS)

EBITDA (LHS)

EBITDA Margin (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Investment arguments
Emphasized focus on marketing and high brand visibility
Owing to continuous marketing activities, that has led to greater visibility of the Cera brand, the advertisement cost for the company has been consistently moving northwards. Marketing expenses constitute around 16% of the net sales and have grown at a 46% CAGR over FY2008-13.

Exhibit 5: Marketing expenses moving northwards

80 70 60 50 48.0 43.3 43.4 35.2 50 40 21.6 11.3 60

(` cr)

30 20 10 0

20 10 0 FY2008 FY2009 FY2010 Commssion FY2011 FY2012 FY2013 % change yoy Advertisement Distribution

Source: Company

CSL intends to widen its reach by opening more retail formats like Cera Style Galleries which display the complete range of Cera products and Cera Style Studios which are company-managed touch and feel experience centres. Currently, CSL has 50 Cera Style Galleries operational pan-India. Both the above retail formats have been a success as evident from CSLs robust top-line growth. CSL also had a massive media campaign during the launch of its new re-designed logo by employing former Miss Asia Pacific turned actress, Dia Mirza, as the brand ambassador.

July 11, 2013

(%)

40

1QFY14

30

(%)

80

14

12

16

100

40

18

20

Cera Sanitaryware | 1QFY2014 Result Update

Expansion of product portfolio to complete the package

CSL has announced its entry into the tiles segment which is a logical extension of its product portfolio, thereby enabling customers to fulfill their entire bathroom products needs. As per the management, the company is to launch high-definition digital wall tiles with matching floor tiles, besides digital polished glazed vitrified tiles, the manufacturing of which would be completely outsourced. Being complimentary products to CSLs existing product portfolio, it would be easy to penetrate these new products into the market, through utilization of the existing distribution channels. CSL is aiming at a revenue of `20cr from the tiles segment in the first year of launch itself.

Increased contribution expenditure

of

sanitaryware

in

total

domestic

Owing to changing lifestyles, sanitary products are now perceived as more than basic necessity. Their role has widened to being status statements; thus commanding a higher allocation of the spending budgets of individuals. Increase in disposable incomes of people has been a vital factor supporting the demand for sanitaryware products. Also, requirement of personal space and privacy are gaining inevitable place, subsequently leading to nuclear families. This has led to augmented residential figures, thereby increasing demand for sanitary products. This trend is expected to continue providing sustainable demand visibility for sanitary products.

Capacity expansion of sanitaryware

CSL has expanded the capacity of its sanitaryware unit from 24,000MT (2.0mn pieces p.a.) to 32,400MT (2.7mn pieces p.a.) in FY2013 and plans to further expand this capacity to 3mn pieces p.a at a cost of `100cr in FY2014. This will enable the company to tap and cater to the increasing demand for sanitaryware products.

Exhibit 6: Capacity utilisation of sanitaryware unit

40,000 35,000 30,000 102 106 90 85 90 120 100 80

(` cr)

25,000 20,000 15,000 10,000 5,000 0 FY2011 FY2012 FY2013E Production FY2014E FY2015E Installed Capacity Capacity Utilization

40 20 0

Source: Company, Angel Research

July 11, 2013

(%)

60

Cera Sanitaryware | 1QFY2014 Result Update

Financials
Exhibit 7: Key assumptions
Particulars (%) Finished Goods: Sanitaryware Installed capacity (MT) Capacity utilisation Sales quantity growth Sales value growth Sale Price/ unit growth Faucetware Installed capacity (units) Capacity utilisation Sales value growth Tiles Sales value (` cr) Raw Material Sanitaryware value growth Traded Goods value growth Sandstone/clay value growth Brass Ignots value growth
Source: Company, Angel Research

FY2014E 36,000 90.0 17.0 25.2 7.0 900 40.0 43.0 20.0

FY2015E 36,000 90.0 17.0 25.2 7.0 900 50.0 37.5 30.0

28.0 2.9 50.6 13.0

29.0 3.7 29.0 13.0

Exhibit 8: Change in estimates

Y/E March Net Sales (` cr) EBITDA Margin (%) EPS (`)
Source: Angel Research

Earlier estimates FY2014E 630 14.4 43 795 13.6 51

Revised estimates 631 14.5 43 797 13.7 51

% change FY2014E 0.3 9.7 (0.4) FY2015E 0.3 9.9 (0.0)

FY2015E FY2014E FY2015E

Top-line to grow at 27.8% CAGR over FY2013-15E

Historically, CSL has witnessed a strong top-line CAGR of 36.6% over FY2010-13. The traction is expected to continue owing to companys continuous marketing efforts to strengthen the brand and increase the visibility. With the enhancement in capacity and the recent entry into the tiles segment, net sales of CSL are expected to grow at a CAGR of 27.8% over FY2013-15E to `797cr in FY2015E. Sanitaryware contributes ~98% to total sales, which is to reduce to ~94% in FY2015 owing to increased contribution from the faucetware and new tiles segments.

July 11, 2013

Cera Sanitaryware | 1QFY2014 Result Update

Exhibit 9: Revenue headed towards north

900 800 700 600 500 400 300 200 100 0 243 FY2011 319 FY2012 488 FY2013 631 FY2014E yoy growth (RHS) 797 FY2015E 31.5 29.4 52.7 26.2 60 50 40

(` cr)

20 10 0

Net Sales (LHS)

Source: Company, Angel Research

EBITDA to grow at 20.5% CAGR over FY2013-15E

On the back of strong revenue growth, the EBITDA of the company is expected to rise from `75cr in FY2013 to `109cr in FY2015E, at a CAGR of 20.5%. The operating margin is expected to correct from 15.4% in FY2013 to 13.7% in FY2015E. The dip is mainly on account of rising raw material costs, which the company is not being able to pass on completely to consumers owing to stiff competition from cheaply available Chinese substitutes and unorganized domestic market.

Exhibit 10: Rising raw material cost dents EBITDA margin

120 105 90 75 18.8 16.7 15.4 13.7 14.5 20 18 16 14 12 8 6 4 46 FY2011 53 FY2012 EBITDA (LHS)
Source: Company, Angel Research

(` cr)

45 30 15 0 75 FY2013 91 FY2014E EBITDA Margin (RHS) 109 FY2015E

2 0

July 11, 2013

(%)

60

10

(%)

27.0

30

Cera Sanitaryware | 1QFY2014 Result Update

Net profit to grow at 18.3% CAGR over FY2013-15E

A robust operating performance is expected to lead the bottom-line to grow at a CAGR of 18.3% over FY2013-15E to `65cr. However, owing to capex plans and entry into new avenues, we expect the debt of the company to rise, still placing the debt equity ratio comfortably at 0.2x times in FY2015E, and interest cost at manageable levels. Thus the resultant PAT margins are to dip from the current 9.5% to 8.1% in FY2015E.

Exhibit 11: Notable absolute PAT growth

70 60 50 11.3 10.0 9.5 8.5 8.1 12 10 8 6 30 20 10 0 27 FY2011 32 46 54 65 FY2015E FY2012 FY2013 FY2014E PAT (LHS) PAT margin (RHS) 4 2 0

(` cr)

Source: Company, Angel Research

July 11, 2013

(%)

40

Cera Sanitaryware | 1QFY2014 Result Update

Competition
CSL, with a market share of 23%, competes with the market leader - Hindustan Sanitaryware & Industries (HSIL; ~44% market share) and the unlisted peer Roca Parryware (~26% market share). CSL with a return on equity of above 25% and EPS of `51.1 for FY2015E looks attractive vis--vis its competitor HSIL.

Exhibit 12: Peer comparison

Company CSL HSIL* Year FY2014E FY2015E FY2014E FY2015E
Source: *Bloomberg, Angel Research

MCAP (` cr) 667 667 579 579

Net Sales (` cr) 631 797 2,076 2,469

OPM (%) 14.5 13.7 15.3 15.3

PAT (` cr) 54 65 85 117

EPS (`) 42.6 51.1 12.6 17.8

ROE (%) 26.5 25.3 9.1 10.2

PE (x) 12.4 10.3 6.9 4.9

PBV (x) 2.9 2.3 0.5 0.5

EV/Sales (x) 1.1 0.8 0.7 0.6

EV/EBITDA (x) 7.3 6.2 4.5 3.8

Outlook and valuation

We expect CSLs revenue to post a CAGR of 27.8% over FY2013-15E to `797cr. EBITDA and net profit are expected to grow at a CAGR of 20.5% and 18.3% over the same period to `109cr and `65cr respectively in FY2015E. At the current market price of `527, CSL is trading at a PE of 10.3x and EV/Sales of 0.8x on FY2015E earnings. Considering the expansion and development plans being undertaken by the company, CSLs returns are expected to rise further and valuations are likely to become more attractive on a forward basis. We maintain our Buy recommendation on the stock with a revised target price of `613, based on a target PE of 12x and implied EV/Sales of 1.0x.

Exhibit 13: One-year forward PE band

700 600 500 400

(` )

300 200 100 0

Jul-08

Jul-09

Jul-10

Jul-11

Jul-12

Jan-09

Jan-10

Jan-11

Jan-12

Price
Source: Company, Angel Research

1.5x

5.5x

9.5x

13.5x

July 11, 2013

Jan-13

Jul-13

Cera Sanitaryware | 1QFY2014 Result Update

Concerns
Risk from un-organized players: The main risk associated in the sanitaryware segment is from the unorganized and local players. The unorganized sanitaryware manufacturers enjoy the benefit of nil excise duty and sales tax and hence their products are ~70% cheaper than the organized sector products. Increase in excise duties from 8% to current 12% will make products from organized players more expensive. Advent of foreign brands in India is also becoming a threat since increased purchasing power may lead to shift in consumer preferences to bigger brands. Changes in government policy related to housing construction, imports, etc are bound to impact the industry. Further slowdown in the housing segment will impact fresh demand for sanitaryware.

The company
CSL, a Gujarat based company, is the third largest sanitaryware company in the organized sector with about 22% market share in India. Apart from sanitaryware and faucets, CSL also deals in the wellness range, consisting high-end and luxury bath tubs, steam cubicles, shower partitions and shower panels. Of the total sales volume, ~55% of its products are being produced in-house while the remaining 45% are outsourced from other parties, including those from China and Oman. The company has also expanded its brand presence to other related categories like showers, faucets, PVC cistern seat cover, etc. It entered the tiles segment recently which is completely outsourced.

July 11, 2013

Cera Sanitaryware | 1QFY2014 Result Update

Sanitaryware industry
The Indian sanitaryware Industry, estimated at around `1500-1800cr, contributes to ~8% of the worlds sanitary production. In India, the organized market dominates the high-end products segment but a majority share is still captured by the unorganized segment in the low-end products segment. The industry has a sustained growth rate of 12-14% p.a. due to increasing housing demand, purchasing power and consciousness towards hygiene. India is emerging as the second largest sanitaryware market in the world and is expected to witness robust growth owing to following:

Low penetration in Indian sanitation coverage

Considering Indias dense population, its sanitation coverage is only ~40%, which is considered to be one of the lowest in the world, thus increasing risk of health hazards and epidemics. According to a recent report by UNICEF, 638 million people in India lack proper sanitation facilities. The government of India is keenly focusing on improving the level of sanitation in the country by introducing housing policies, sanitation policies, public toilets schemes, 100% FDI in real estate, etc which are being termed as some of the major factors contributing for the growth of sanitaryware market in India. With increasing awareness towards improving public health, the sanitaryware segment is to enjoy high attention.

Change in lifestyle and awareness in population

Witnessing a paradigm shift in the change in middle and upper class lifestyles in small but significant ways, rising per capita income, increasing awareness about health and fitness and changing consumer mindsets will drive the demand for premium sanitaryware products. The concept of making a clean and hygienic toilet is growing rapidly in those rural areas where a toilet did not even exist until a few years ago.

Wide exports horizon

Indian sanitaryware products are very competitive because of their low production cost, and hence exports from India are also increasing every day. Seven foreign brands like H&R Johnson, Roca and Kohler to name a few, have established their operations in India.

July 11, 2013

10

Cera Sanitaryware | 1QFY2014 Result Update

Profit and Loss (Standalone)

Y/E March (` cr) Gross sales Less: Excise duty Net Sales Other operating income Total operating income % chg Net Raw Materials % chg Other Mfg costs % chg Power % chg Personnel % chg Other % chg Total Expenditure EBITDA % chg (% of Net Sales) Depreciation & Amortisation EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of Net Sales) Recurring PBT % chg PBT (reported) Tax (% of PBT) PAT (reported) Extraordinary Expense/(Inc.) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg Dividend Retained Earning FY2011 256 13 243 243 27.0 86 29.6 15 18.8 12 94.3 28 21.1 56 19.4 197 46 26.8 18.8 7 39 30.8 16.1 3 5 2.1 36 32.9 42 15 36.1 27 (1) 27 38.4 11.3 22 22 38.4 4 24 FY2012 336 16 319 319 31.5 119 38.0 20 34.5 16 27.6 43 55.7 68 21.5 266 53 16.8 16.7 8 46 16.6 14.3 4 7 2.1 42 14.3 48 16 33.9 32 32 16.7 10.0 25 25 16.7 4 28 FY2013 511 24 488 488 52.8 214 79.4 26 30.2 23 48.2 58 34.4 92 34.7 413 75 40.9 15.4 9 66 44.4 13.5 7 9 1.8 59 41.2 68 22 31.9 46 46 44.3 9.5 37 37 44.3 6 40 FY2014E 662 31 631 631 29.4 283 32.2 34 29.4 30 29.4 75 29.4 119 29.4 540 91 21.6 14.5 12 79 19.9 12.5 8 8 1.3 71 21.1 79 25 31.9 54 54 16.7 8.5 43 43 16.7 7 47 FY2015E 835 39 797 797 26.2 363 28.4 42 26.2 38 26.2 95 26.2 150 26.2 688 109 19.3 13.7 16 93 18.3 11.7 9 10 1.3 85 19.2 95 30 31.9 65 65 19.9 8.1 51 51 19.9 7 57

July 11, 2013

11

Cera Sanitaryware | 1QFY2014 Result Update

Balance Sheet (Standalone)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Reserves & Surplus Shareholders Funds Minority Interest Total Loans Other long term liabilities Long Term Provisions Net Deferred tax liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Lease adjustment Goodwill Investments Long Term Loans and adv. Current Assets Cash Loans & Advances Inventory Debtors Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 113 35 78 6 8 15 132 37 7 50 39 62 70 177 132 42 90 11 1 15 178 32 9 92 45 78 99 217 175 50 125 4 1 21 228 40 10 94 83 102 125 277 235 63 173 8 1 28 261 58 15 99 90 134 128 338 295 78 217 8 1 36 319 60 18 105 136 170 148 411 6 106 112 32 5 14 14 177 6 133 140 41 6 17 14 217 6 173 180 55 7 20 16 277 6 220 227 60 9 26 16 338 6 278 284 66 12 32 16 411 FY2011 FY2012 FY2013 FY2014E FY2015E

July 11, 2013

12

Cera Sanitaryware | 1QFY2014 Result Update

Cash Flow Statement (Standalone)

Y/E March (` cr) Profit Before Tax Depreciation Other Income Change in Working Capital Direct taxes paid Cash Flow from Operations (Incr)/ Decr in Fixed Assets (Incr)/Decr In Investments Other Income Cash Flow from Investing Issue of Equity/Preference Incr/(Decr) in Debt Dividend Paid (Incl. Tax) Others Cash Flow from Financing Incr/(Decr) In Cash Opening cash balance Closing cash balance FY2011 42 7 (5) (9) (15) 19 (14) 8 5 (1) 3 5 (4) (16) (15) 2 34 37 FY2012 48 8 (7) (18) (16) 15 (19) 6 7 (6) 12 (4) (22) (14) (5) 37 32 FY2013 68 9 (9) (18) (22) 29 (36) (6) 9 (34) 18 (6) 1 13 9 32 40 FY2014E 79 12 (8) 16 (25) 74 (64) (7) 8 (63) 13 (7) 7 18 40 58 FY2015E 95 16 (10) (19) (30) 51 (60) (7) 10 (57) 15 (7) 8 1 58 60

July 11, 2013

13

Cera Sanitaryware | 1QFY2014 Result Update

Key Ratios (Standalone)

Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Net sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset TO (Gross Block) Inventory / Net sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Int. Coverage (EBIT/ Int.) (0.1) (0.3) 14.4 0.1 0.2 11.4 0.1 0.2 9.3 0.0 0.0 10.1 0.0 0.0 10.9 2.1 65 54 115 50 2.4 105 52 108 77 2.8 70 62 90 64 2.7 72 52 90 40 2.7 75 62 90 41 25.6 35.8 27.3 23.2 30.5 25.5 26.7 32.6 29.0 25.7 31.5 26.5 25.0 30.6 25.3 16.1 0.6 1.9 19.8 5.4 (0.1) 18.2 14.3 0.7 1.8 17.4 6.4 0.1 18.1 13.5 0.7 2.1 19.4 8.8 0.1 20.2 12.5 0.7 2.3 19.9 8.8 0.0 19.9 11.7 0.7 2.3 18.7 8.8 0.0 18.8 21.7 21.7 26.1 2.5 88.5 25.3 25.3 31.4 3.0 110.3 36.5 36.5 43.9 4.0 141.9 42.6 42.6 52.5 4.5 179.2 51.1 51.1 63.5 5.0 224.5 24.3 19.6 6.0 0.6 2.7 14.3 3.7 20.8 16.8 4.8 0.7 2.1 12.7 3.1 14.4 12.0 3.7 0.9 1.4 9.0 2.5 12.4 10.0 2.9 1.0 1.1 7.3 2.0 10.3 8.3 2.3 1.1 0.8 6.2 1.6 FY2011 FY2012 FY2013 FY2014E FY2015E

July 11, 2013

14

Cera Sanitaryware | 1QFY2014 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Pvt. Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Pvt. Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Pvt. Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Cera Sanitaryware No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

July 11, 2013

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