Thursday, December 15, 2011

Pricing Power and Cera Sanitaryware

The single most important decision in evaluating a business is pricing power. If you've got the power to raise prices without losing business to a competitor, you've got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you've got a terrible business.

- Charles Munger / Warren Buffett


In the current business environment, how many businesses can confidently say that they are able to pass on the 'Cost Push' on account of inflation?
Not Voltas, Blue Star or Steel companies.

How many businesses are not afraid of goods getting dumped from China?
Not L&T and BHEL. They have been lobbying with the government for more than past 6 months to have anti-dumping duty on imported power equipments from China.

In this context, checkout the following interview of the executive director of Cera, Mr. Vidush Somany. From this interview, one can get answers to the above two questions.

I believe, Cera has got a reasonable pricing power.



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8 comments:

  1. Anand ReddyDecember 19, 2011 at 1:45 AM

    Hi Priyank - Good analysis, but I have read few reports on this company. Somehow I feel they don't have pricing power. Though the company management says they were able to push the cost, but in reality you can guess. It's very hard for them to push the cost to end user. The company is good and should get re-rated but w.r.t pricing power somehow I feel it's not right.

    Let me know your comments.

    ReplyDelete
  2. Priyank J. SanghaviDecember 26, 2011 at 12:15 PM

    Anand, checkout point 4 in the report I have published at http://www.scribd.com/doc/58798177/Cera-Sanitary-Ware-Ltd-Further-Research.

    It shows that from Mar 03 to Mar 09, growth of sanitaryware by volumes has been 8.84% but by price it has been 17.27%. Same applies to the fittings business.

    ReplyDelete
  3. Anand ReddyJanuary 7, 2012 at 7:43 AM

    Hi Priyank - Thanks for the link, I agree on the point you mentioned. Also I agree its a good company but w.r.t pricing I am not sure if they truly are in control of it when in the market there are lot of competitors ( organised & un-organised players).

    Thanks,
    Anand

    ReplyDelete
  4. Fundoo_PupilFebruary 2, 2012 at 10:58 PM

    Hi,

    Nice analysis.
    Just a question from my side-
    Any MOAT???

    ReplyDelete
  5. Priyank J. SanghaviFebruary 2, 2012 at 11:50 PM

    For Cera's Moat, checkout my other post on Cera - http://sanghvipriyank.blogspot.in/2011/04/cera-sanitaryware-limited-buy.html

    ReplyDelete
  6. UnknownDecember 11, 2014 at 11:21 AM

    Thanks for post! Sanitary ware. Sanitary ware.

    ReplyDelete
  7. UnknownApril 21, 2016 at 12:12 PM

    The first para is very impressive. You can handle the pricing power if you are confidentially increase the market price of product like sanitary ware, bathroom accessories and other bathroom products. If you are the good quality producer at very best price you are king of the market.

    ReplyDelete
  8. UnknownMay 4, 2016 at 5:03 PM

    Thank you very for sharing beautiful post. CERA is one of the best leading products in sanitary ware products.

    ReplyDelete

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