Nikhil_Tripathi

Q&A_ How Mr. Vijay Kedia made fortune in Cera Sanitaryware

BSE:CERA   CERA SANITARYWARE LTD
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In 2004 and 2005, Mr. Vijay Kedia identified and invested in three such shares ( Atul auto, Aegis logistics , Cera Sanitaryware) which appreciated more than 100 times in next 10 to 12 years.

Q: Who is Mr. Vijay Kedia?
A: Mr. Vijay Kedia is one of the ace investors from India, who mostly invests in mid-cap Indian stocks.

Cera Sanitaryware:-

Q: Cera Sanitaryware has given almost 100 fold return. How?
A: Well, following is the table of PBT (profit before tax) along with share price as on 01st April of each and every financial year (for the last 17 years).

Year PBT (in Crores) Share Price (in Rs )
2004 |2.63 |12.8
2005 |3.98 |29.8
2006 |8.96 |87.25
2007 |13.98 |123.5
2008 |15.53 |121
2009 |19.90 |53.8
2010 |29.89 |251.5
2011 |41.52 |162
2012 |48.50 |233
2013 |67.81 |450
2014 |82. 40 |870
2015 |100.93 |2490
2016 |129.46 |1825
2017 |155.82 |2970
2018 |154.44 |3400
2019 |180.17 |3000
2020 |140.61 |2250

You can see that the profit of FY 2004 (which was Rs 2.63 crores) has been increased 68 times (to Rs 180.17 crores) in the FY 2019. So as the share price ( Rs 12.8 per share to Rs 3000 per share in 2019).

Q: So, at what price Mr. Vijay Kedia bought shares of Cera?
A: I searched the internet but didn’t found the actual price he bought Cera at. Therefore let’s take closing price for FY 2005 (which is Rs 30 approx.). He had around 405,248 shares (as on quarter ending Sep 2011)

Q: So the profit before tax has been increased 68 times and share price increased 100 times? Why?
A: There are mainly two ways a shareholder make money. One is appreciation in the share price over time and other is dividend paid annually or quarterly.
Cera Sanitaryware has paid on an average 105% dividend on the (face value Rs 5) since last 17 years.

Q: Share price has fallen aggressively in year 2009. Why?
A: It was due to subprime loan mortgage crisis of the year 2008 (market crash).

Conclusion:-
Mr. Vijay Kedia made fortune in Cera Sanitaryware with his strong perseverance. Strong fundamentals and growth of Cera made this possible.

Disclaimer: Investment in securities markets are subject to market risks. Please do your own analysis and risk assessment before investing.

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