Cera Sanitaryware - Q3 Result Updates

Financial Results & Limited Review for Dec 31, 2013
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Results Press Release
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CRISIL Recent Report on Cera Sanitaryware
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Revenues stood at 160 Cr Vs 128 Cr YoY, growth of 25%.
Net Profit stood at 10.76 Cr Vs 12 Cr YoY, a growth decline of 10% YoY.
EPS at 8.5 Vs 9.48.

For the nine months ended Dec'13 Vs Dec'12
Revenues stands at 445.5 Cr Vs 329.9 Cr, growth of 35%.
Net Profit stands at 32.57 Cr Vs 32.27, growth of 1%.

I am not too far from CRISIL report which suggests that the stock is over-valued currently. But, again, as I said earlier also, it is more because of very bright future speculated ahead, for the company. The growth of 25% might seem reasonable to few, but actually its a big achievement when compared with its peers. The largest sanitaryware manufacturer in India, Hindware Sanitaryware (HSIL), reported a decline in sales this quarter, which confirms the depression in industry and forces investors to put their investment in a good growth story like Cera.
Fundamentally, even CRISIL have rated this stock 4/5.

Few important points derived from Conference Call with Cera found in ResearchBytes:
1) The margins were hit because of higher input cost, which is probably, the story, with all manufacturing companies.
2) As the company started focusing more on faucetware, which is less margin business than sanitaryware, the operating margins are expected to be under pressure for some time. Last year, they achieved operating margin of 17%, which is unlikely this time. It will take time for the company to build on margins. But the good thing is that the company is able to build on revenues because of such business, as it is higher in demand.
3) The company is taking some steps to improve margins by 2 ways
a) By reducing the input cost. They have set up 2 windmills for power generation for starters to achieve that.
b) By increasing the prices across all segments
4) At present, the company has around 10000 dealers across India and they are expecting it to grow by 20% in coming years. As they are providing "Value For Money" solutions to customers, they are not much concerned about competition.
5) The company has a strong market share of 30% in Tier II and Tier III cities, and it is slightly higher in South India.
6) They have confirmed that they are ready to enter in JVs for expansion. Their advertisement expense is close to 5% of total sales.
7) Even in difficult times, the company is expecting the topline to grow by close to 30% in coming 2-3 years.

My Views:
As said, the stock is over-valued, but long term investors can continue to hold. The future is bright here, as seen now. For those, looking for new entries can look to enter in dips, and average out if it goes down further.
When I posted first time about Cera, I gave a very conservative target predicting the difficult times ahead, here:
http://fundamentalstockideas.in/cera-sanitaryware-a-safe-investment/
I stick to that same target for now, and will be upgrading further, if company continues to outperform.
All the best!!!!!