Why is Axis Securities bullish on Greenply Ind, Cera? Shares rally up to 7%

Business Standard

4 days ago

Axis Securities on Greenply Industries, Cera Sanitaryware: Shares of building materials companies Greenply Industries and Cera Sanitaryware were in focus on Wednesday, July 16, 2025, after domestic brokerage firm Axis Securities initiated coverage on both with a 'Buy' rating. The stocks rallied up to 7 per cent in intraday trade on the BSE following the development.
Greenply Industries shares jumped as much as 5.49 per cent to an intraday high of ₹320.95 apiece, while Cera Sanitaryware share price gained 6.74 per cent to hit an intraday high ₹6,945.75 per share.
Axis Securities has set target prices of ₹385 and ₹8,500 on Greenply Industries and Cera Sanitaryware respectively, implying a potential upside of 26 per cent and 31 per cent from current market levels.
Axis Securities expects India's building materials sector to benefit from a revival in real estate demand beginning FY26, which typically follows a 1.5-2-year lag from the start of a real estate upcycle.
'The Building Products sector in India is poised for a strong demand revival from FY26, aligning with the typical 1.5-2-year lag following a real estate upcycle,' the brokerage said. It noted that while FY25 saw softness due to election-related liquidity issues, ongoing government initiatives like PMAY, Jal Jeevan Mission, and Smart Cities are already boosting demand across categories.
'For example, the ₹27,500 Cr allocation to PMAY-Urban in CY21–22 led to an average revenue growth of 57 per cent for companies like Cera, Kajaria, and Astral by CY23,' it added.
Rising incomes, urbanisation driving upgrades
India's improving income dynamics are another key growth lever, Axis Securities pointed out.
'India's rising per capita income, up about 14 per cent in FY24 to ₹1.96 lakh, and a shift towards a predominantly middle and upper-middle-class population… is significantly transforming home improvement spending,' the brokerage said.
It highlighted that dual-income households, growing urbanisation in Tier-2 and Tier-3 cities, and higher financial stability are fuelling demand for renovations, premium fittings, and lifestyle upgrades-particularly in kitchens and bathrooms.
'Demand for branded fittings, designer sanitaryware, vitrified tiles, and luxury bathroom products has surged, with metro cities witnessing 2x Y-o-Y growth in smart sanitaryware sales,' Axis Securities said.
Formalisation of the Industry
The brokerage also sees tailwinds from the rapid formalisation of India's building materials industry, driven by GST, RERA, and new BIS quality control norms.
'Organised players are steadily gaining market share… the organised segment-growing at about 9 per cent annually – is positioned to dominate,' it said, citing rising consumer preference for branded and quality-certified products.
Changing home preferences Post-Covid
Axis Securities noted a post-Covid shift toward home-centric lifestyles and wellness-oriented upgrades such as home gyms, smart furniture, and spa-inspired bathrooms.
'With property prices rising, many homeowners are choosing to upgrade their current homes rather than relocate, fueling personalised renovations featuring unique layouts and culturally nuanced decor. From smart TVs and ACs to intelligent sanitaryware, Indian homes are increasingly integrating style, functionality, and technology,' the brokerage said.
Greenply: MDF growth, hardware foray
For Greenply Industries, Axis Securities expects a Revenue/Ebitda/PAT CAGR of 12 per cent/20 per cent/40 per cent over FY24-27.
'Greenply Industries is well-positioned to capitalise on structural shifts and regulatory reforms in the Indian wood panel and interior solutions market,' it said.
It added that Greenply's MDF plant in Vadodara, which became operational in May 2023, achieved 75 per cent utilisation in FY25 and is targeting 85-90 per cent by FY26. The company is also expanding into furniture hardware via a ₹100 crore JV with Samet, aiming for ₹125-150 crore in revenue by FY27.
'The mandatory implementation of BIS norms is accelerating formalisation in the ₹20,000 crore plywood industry… enabling branded, compliant manufacturers like Greenply to consolidate market share,' the note said.
Cera: Premiumisation play
For Cera Sanitaryware, Axis forecasts a Revenue/Ebitda/PAT CAGR of 10 per cent/9 per cent/9 per cent from FY24-27.
'Cera is leveraging premiumisation trends in India's bathware segment as bathrooms increasingly transform into lifestyle-centric spaces,' it said.
The brokerage noted that while near-term retail demand remains subdued, a recovery is likely by Q2FY26. The relaunch of its Senator brand and expansion of its Luxe line are expected to drive revenue growth. Cera is also focused on real estate projects (38 per cent of revenue) and Tier 2/3 markets.
'Targeting ₹2,700 crore in revenue by FY27, the company is investing in innovation, high-margin segments, and capacity expansion to maintain its growth trajectory,' Axis Securities said.