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With a market capitalization of Rs. 7,261.05 crore, Cera Sanitaryware Ltd. is a mid-cap company that operates in the consumer discretionary industry. The company is the top supplier of household products, including whirlpools, kitchen sinks, mirrors, shower enclosures, shower panels, tiles, and sanitaryware. Let's find out how the shares of Cera Sanitaryware, one of the multibagger stocks, managed to make investors crorepati in years with bonus shares.

Share price and bonus issue history of Cera Sanitaryware

On the NSE, the shares of Cera Sanitaryware Ltd closed today on the NSE at 5,560.00 apiece, up by 4.19% from the previous close of 5,336.25. The stock price has risen from 70.75 as of 2nd November 2007 to the current price level, which marks a multibagger return and an all-time high of 7,758.66%. An investment of 1 lakh in the company at the beginning of November 2007 would have given you a shareholding of 1413 shares. The company was doing well to the date and was not exceedingly profitable at that time but taking into account the plans and financial strategy, the company on 2nd September 2010 had issued a bonus of 1:1 ratio which resulted in multiplying of investor's existing shares and doubled the count of shares they had.

The total number of shares that the investors had, added extra 1413 shares and had resulted in making the count of shares to 2826 after bonus declaration. The value of the shares at that very instance of bonus issue was over 4 lakhs, which means right after the event your initial investment of 1 lakh quadrupled and became more than 4 lakh. Afterwards, the company put forth its growth and picked up the pace with its competitors from the year 2012, it had shaken hands with many big investors and also took care of the small investors.

The total share count of 2826, at today’s market price, is worth over 1.57 crore which is 100 times more than what the investors had invested. It suggests that smart decision-making in choosing stock and patience can give you the hand on a greenish/profitable portfolio.

Q1FY23 Results of Cera Sanitaryware

On a standalone basis, the company reported revenue from operations of 395.75 in Q1 FY23 compared to 222.84 Cr recorded in Q1FY22 which represents a YoY growth of 78%. The company's total income from operations rose 73% YoY from 228.59 Cr in the same quarter of the previous year to 395.48 in the quarter ended June. The company's total expenditure grew by 65% YoY from 203.01 in Q1FY22 to 334.59 Cr in Q1FY23. The company reported an EBITDA of 60.89 Cr in Q1FY23 compared to 25.58 Cr in Q1FY22 which represents a YoY growth of 138%. The company reported a profit before tax (PBT) of 52.96 Cr in Q1FY23 which is a YoY growth of 207% from 17.25 Cr reported in Q1FY22 and the company's net profit or profit after tax (PAT) grew by 207% YoY from 12.91 Cr in Q1FY22 to 39.63 Cr in Q1FY23.

Should you buy the shares of Cera Sanitaryware?

The research analysts of the broking firm Bonanza Portfolio Ltd said today in a note that “Due to strong demand and record utilization, we expect the company to post Strong Revenue/EBITDA/PAT CAGR of 21%/21%/24% during FY22-25E with slight jump in margins by 50 bps YoY. As we look ahead, we continue to see an immense potential for their products, healthy demand, coupled with strong positioning in the industry which will enable them to gain traction and build momentum going forward. Additionally, balanced products portfolio at a varied price points, robust distribution network and rising brand awareness in Tier-II and Tier-III cities bode well for sustained earnings growth. As per DCF we came up with a target price of 6,564/share which currently trades at a discount of 19%."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. 

ABOUT THE AUTHOR

Vipul Das

Vipul Das is a Digital Business Content Producer at Livemint. He previously worked for Goodreturns.in (OneIndia News) and has over 5 years of expertise in the finance and business sector. Stocks, mutual funds, personal finance, tax, and banking are among his specialties, and he is a professional in industry research and business reporting. He received his bachelor's degree from Dr. CV Raman University and also have completed Diploma in Journalism and Mass Communication (DJMC).
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