Cera Sanitaryware Downgraded to 'Sell' by MarketsMOJO Due to Poor Growth and Bearish Trend

Cera Sanitaryware, a midcap company in the ceramics/marble/granite/sanitaryware industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 13, 2024. This decision was based on several factors, including poor long-term growth with net sales only increasing by 6.69% and operating profit by 8.98% over the last 5 years. Additionally, the company's results for September 2024 showed a decrease in PBT LESS OI(Q) at Rs 58.76 crore, falling by -11.24%.
Technically, the stock is currently in a bearish range, with the technical trend deteriorating from Mildly Bearish on November 11, 2024. The stock has generated a return of 1.92% since then, with multiple factors such as MACD, Bollinger Band, and KST all indicating a bearish trend.

In terms of performance, Cera Sanitaryware has underperformed the BSE 500 in the last 3 years, 1 year, and 3 months, with a return of -18.68% in the last year. However, the company does have high management efficiency with a ROE of 15.41% and a low debt to equity ratio of 0 times.

The stock is currently trading at a premium compared to its average historical valuations, with a fair valuation and a price to book value of 6.8. In the past year, while the stock has generated a return of -18.68%, its profits have only risen by 0.4%, resulting in a high PEG ratio of 39.8.

One positive aspect of the company is its high institutional holdings at 28.75%, indicating that these investors have better capability and resources to analyze the fundamentals of companies compared to most retail investors.

With a market cap of Rs 9,192 crore, Cera Sanitaryware is the second biggest company in the sector, behind Kajaria Ceramics, and constitutes 19.92% of the entire sector. Its annual sales of Rs 1,851.49 crore make up 12.23% of the industry. Overall, the stock has been downgraded to a 'Sell' due to its poor long-term growth and bearish technical trend, despite its high management efficiency and low debt to equity ratio.