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The future of Cera Sanitaryware will depend on how the construction sector plays out in 2013...

The Indian sanitary ware market estimated at around Rs 2,000 crore and controlled by a handful of players. The organised market comprises 60 per cent of that market of which Cera is the third-largest player with a 22 per cent share. Its product portfolio includes a wide range of bath tubs, bath cubicles, taps, faucets, jacuzzi and kitchen sinks among others. Outlook and valuations.

Fortunes of the sanitaryware industry are tied to the construction sector as 93 per cent of incremental sales come from fresh construction. So a lot will depend on how the construction sector shapes up in 2013. Cera, with its diversification into newer lines and increased capacity is positioning itself to take advantage of any improvement that the sector witnesses. The small base gives it scope of going higher. At the CMP, the stock trades at a PEG ratio of 0.37. Invest with a 5-year horizon.

How they did it
* Higher capacity building has enabled Cera to increase its topline sharply by 50 per cent. Further capex addition is expected to take total capacity to 3 million pieces per annum
* Cera has reported an annual revenue growth of 26 per cent in the past 5 years. A lot of it has been because of the company’s rapidly expanding product portfolio